Five steps for employers to take before furlough ends

The government’s furlough scheme (also known as the coronavirus job retention scheme) is set to end on the 30^th of September. At its peak in May 2020, 30% of the nation’s workforce were furloughed. Since the scheme began, 11.6 million workers were furloughed across 1.3 million businesses in the UK.

As of July 2021, the furlough scheme has cost the government £64bn and has saved over 2m jobs and has helped protect tens of thousands of start-ups and SMEs from closure. The number of workers on furlough decreased across February, March, April, May, June and July 2021.

The 10 industry groups with the highest rates of jobs being put on furlough were passenger air transport (51%), travel agency and tour operator activities (46%), photographic activities (35%), creative; arts and entertainment activities (28%), manufacture of wearing apparel (26%), organisation of conventions and trade shows (25%), manufacture of musical instruments (24%), other reservation service and related activities (24%), printing and service activities related to printing (24%) and retail sale via stalls and markets (23%).

However, as the clock ticks down to the end of the existing scheme on 30 September, many businesses are concerned about what will come next.

The good news is there are a number of things businesses can be doing to prepare the best they can. The employment law team at Harper James Solicitors can provide expert advice on how best to navigate the challenges the winding down of furlough will bring.

Our solicitors are experienced in supporting businesses from start-up to scale-up and provide affordable support at a time when cost-effective legal services are more vital than ever. Ella Bond, an experienced employment lawyer based in our Birmingham office, is sharing five steps she thinks businesses can take now to best prepare.

Ella says: ‘The government’s furlough scheme has been an incredibly important safety net for many businesses, small and large, across the country. But as we move towards the end of the scheme, there will be challenges for those businesses who are due to have employees return to work from the scheme and be liable to meet their payroll costs in full. Difficult decisions may be ahead about whether a business has to make job losses and/or other wider changes. Whatever the situation, it pays to be prepared and to put plans in place now which ensure your business is in the best possible position to manage the winding down of the furlough scheme and the associated impact it may have on your company. Acting now can help ensure you have a stronger business in the future.’

Ella recommends carrying out the following five steps:

Assess your business’s fitness for the future

Carry out a thorough forecasted assessment of your business. The assessment should include the company financials, taking into account sales, income, reserves and liabilities (including the full salaries of those furloughed workers who are due to return). It should also include consideration of business requirements in terms of workflow and staff resources.

Get legal help if you need to make staff changes

If, as a result of the business assessment, it becomes apparent that the company cannot meet its liabilities and/or the business need does not justify the current staffing structure, then you will need to consider what solutions may be available to you.

In terms of staffing this may include possible redundancies, changes to terms and conditions, redeployment of staff or enforcing a right of lay-off (if there is one present in the contract). There are legal requirements and obligations involved in all of these options so you should seek legal advice to assist you with deciding and implementing any proposals.

Adapt your working environment

Adapt the working environment and arrangements to take into account those workers returning from furlough. This should include adequate distancing measures being put in place, increased sanitisation of areas and equipment, ensuring that adequate signage is present around the building and informing and providing all returning workers with copies of any new policies and procedures relevant to them.

Where staff will be working from home, you should ensure that they are provided with any necessary equipment, health and safety assessments have been conducted with regard to their home set-up and environment and that written arrangements are in place with regard to things like ownership of any property those employees will use and payment of expenses such as electricity bills.

Schedule return to work meetings for staff

Conduct return to work meetings with staff who are coming back from furlough (these could be socially distanced face-to-face meetings or conducted remotely eg via video call). Check that the staff are clear on the return-to-work arrangements and also enquire as to how they are feeling about their return to work. The current health pandemic has had a significant impact on a lot of people’s lives, emotional health and wellbeing. As their employer, it is important you are alert to any issues and offer support where appropriate.

Pay attention to annual leave

Ensure that any staff annual leave arrangements are well managed to ensure the operational needs of the business are met. Whilst staff have been able to take annual leave whilst on furlough, many of them may not have done so or will have taken a reduced amount and therefore leaving many accrued days still to be taken. Whilst the Government has relaxed rules around the carry-over of leave into the next 2 leave years, the taking of it should still be managed to ensure stability and prevent further problems arising down the line. Management measures may include requiring staff to take a certain amount of leave on or by specific dates or requiring staff not to take leave during particularly busy periods. Companies could also introduce other control measures such as limits on the amount of leave that can be taken at any one time and the number of people within teams or departments who can be on leave at the same time as each other.