What employers need to do once the furlough scheme ends

During the Coronavirus pandemic, the UK government created the furlough scheme as a financial relief for both businesses and employees. It was relatively successful as the scheme was able to save 11.6 million jobs during the Coronavirus pandemic. 

The purpose of the furlough scheme was to safeguard the livelihoods of millions of individuals in the UK who worked in industries that were no longer viable during the Coronavirus pandemic, such as live music, nightclubs, travel, business events, hospitality, and retail. Now that the system is coming to an end, businesses must either take full responsibility for those employees or let them go.

According to estimates from the Office for Budget Responsibility, the cost of furlough will be around £66 billion from March 2020 to September 2021. Which is a larger sum than was anticipated by Mr Rishi Sunak.

The UK government has been contributing up to a monthly maximum of £2,500 towards the wages of workers who were unable to work or whose employers could no longer afford to pay them. They initially paid 80% of the wages, but in August and September they only paid 60%, with employers contributing 20% of those wages.

Has the scheme worked?
As aforementioned, the scheme successfully secured 11.6 million jobs enabling the workforce to recover during the Coronavirus pandemic. Additionally, the Resolution Foundation stated that the furlough scheme was “a very successful and well-implemented policy intervention".

The plan was to keep people connected to occupations that would be available once the pandemic had passed. However, some furloughed employees have been laid off in the last 18 months, particularly when it appeared that the furlough programme was coming to an end late last year. Fortunately, the number of layoffs has decreased in recent months as the economy has reopened and continues to thrive.

If you have been made redundant, there are other financial support that you can refer to should you find yourself in the position of needing financial aid. You may be eligible for Universal Credit; it is one of the main financial measures in place for those on low income.

For more information on how Universal Credit works, please read our blog post on, “The '£20' boost in Universal Credit has come to an end: how much are you entitled to?”

What should businesses do now?
The health and safety of your employees is of the utmost importance to your business. As the Coronavirus is still in circulation, many employees may be reluctant to resume their roles at your company. It is critical that you ensure your employees are safe within the working environment.

Additionally, you should try to figure out why individual employees are hesitant to attend and identify any unique safety issues. Health risks, concerns about other employees' lack of caution, and commuting challenges are also possibilities as to why some may be hesitant to return to work.

Depending on the nature of the employee's employment, the simplest approach may be to enable them to continue working from home, which has been a popular working model during the Coronavirus pandemic. 

Now that the scheme has finally come to an end, you may be thinking about how your business will operate now that you can no longer claim your employees’ wages from the government scheme. You may have to think about:

  • Terminating previous employees’ contracts - When a company closes its firm or workplace, or when there is a reduced demand, or no longer a need, for employees to do specific tasks, a redundancy issue arises. Employers must follow a fair process and engage with each employee individually about the potential redundancy and its implications at all stages before making any choices.

  • Bring back employees under different terms and conditions suggested by employees - for instance, you may renegotiate the terms of employment with employees in order to lower salary and/or hours Any modifications to employees' terms and conditions, on the other hand, must be handled with caution, since attempting to impose changes unilaterally could result in potential claims, such as breach of contract and/or constructive dismissal.

Making an employee redundant may not be an easy task but should be the last resort if your business can no longer pay for their work or if you find that your business does not require their skills for a particular role in the company. 

On a positive note, many businesses with large numbers of furloughed employees claim to have rehired everyone, and unions had not heard of any substantial layoffs. This may prove to be true for you too. 

We at Persona Finance understand how overwhelming it is to operate a business during the Coronavirus pandemic, and it may be more difficult now that the furlough scheme has ended. We aim to provide remote accounting services to simplify your business needs. For more information on our services, please contact Persona Finance at [].
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