How to Plan for the End of Furlough
As of this afternoon the Government's Coronavirus Job Retention Scheme (CJRS) is due to come to an end on 30 June and, at the moment, there is no indication whether it will continue after this date and, if it does, in what form.
We all hope that by the end of June the current lockdown measures will have been eased and an economic revival will be underway. However, all organisations will need to start planning for the future and, as part of this, whether their pre-crisis structure and employment costs will be sustainable when government subsidies come to an end or are reduced.
If financial predictions suggest a requirement to reduce staffing costs, then a range of responses will need to be considered over the coming weeks to ensure there is a strategy in place, in advance of 30 June.
Next Steps
Following the financial crisis in 2008, employers in the UK adopted many different ways of managing their employment costs, ranging from temporary reductions in salary to sabbaticals and, regrettably, redundancies.
We have set out below a number of points to help you start the process of planning for an uncertain future -
- Crunch the numbers to identify what effect the end of the CJRS will have on your business.
- If the absence of government reimbursement will not be sustainable, or will only be sustainable for a limited period, think through the options available and when those options will need to be implemented.
- If you have existing employee representatives, or a recognised union, consider making them aware of the potential issues the organisation faces in the longer term and work with them to see what options are viable.
- If redundancies are possible, think through how many employees might be affected and at what locations.
- If there is a possibility that 20 more redundancies will be required at one location within a period of 90 days, take into account the consequences of having to comply with the statutory obligations around collective consultation.
- Remember that in these circumstances information must be provided to employee representatives, and there must be consultation on the reasons for redundancies and ways they might be avoided.
- In terms of timing, there is a minimum requirement of 30 or 45 days from the point that information is provided to employee reps before the first redundancies can take effect.
- Check that any existing employee reps are properly constituted to consult on collective redundancy
- Consider whether it would be prudent to put employee reps in place now, even if it turns out they are not needed.
- Make sure that the organisation is aware of its obligations should any firm proposals to make redundancies arise.
- If there are no proposals to make redundancies at this stage, make sure any paper trail created makes this clear.
- Even if numbers of potential redundancies will not meet the statutory thresholds, think through how long a fair and open redundancy process will take.
- Try and identify the potential costs of redundancies, taking into account how long any process will take, notice pay, accrued but untaken holiday and redundancy payments. If the company will not be able to meet these potential liabilities take advice to ensure that company directors comply with their statutory duties.