When the furlough scheme was first announced on 20 March 2020 one of the criticisms (from employers) was that this created a political situation amongst employees.  In some cases, there was enough work for employees to work on reduced hours.  However why would an employee take a pay cut to do work when they could be paid 80% to do nothing on furlough?

The obvious answer for an employer was if you don’t do the reduced amount of work then there will probably be no employment to return to once we come out of lockdown. It sounds like a hot-headed response, but it is a very real response and one that we will see occur regularly over the coming months.  While Furlough is an option this can help reduce what are often the high costs of making redundancies, but it will not cover all the costs.

How furloughing interacts with redundancies

With Rishi Sunak’s announcement on the 12 May 2020 the balance is changing.

From August, it appears that the amount an employer can claim for the furlough grant is reducing but the employee is still entitled to 80% of their normal pay. This means that it is becoming less appealing for employers to let staff remain on furlough.  Will the cost of keeping staff on furlough outweigh the cost of bringing them back to work when there is not enough work for them to do?

But are you able to bring all your staff out of furlough?  Probably not, if sales don’t go from 0 to 100% in the blink of an eye!  What can you do? Below are a number of considerations to make to help guide your decisions on each member of staff, while we await further details from the government about the future of Furloughing.

What do you expect to have demand from customers for?

Before looking at the staff, you need to look at sales.

Not all of the business’s normal offerings will be in demand instantly, and it may be that some products or services that you normally don’t provide much of will now be the first item to be in demand. You might specialise in cleaning but now need to do more deep-cleans than you do regular cleans. 

I suspect that there are some cases where regular items like car services or check-ups with the vet that normally trickle through each month will now be in peak demand as there is a backlog of work to be done from the lost months.  This is going to need a little bit of crystal ball gazing and the plan may have to be changed at short notice but starting with a plan is better than having no plan.

  • What sales are likely to be in demand in the recovery phase?
  • Do you have capacity for those sales?
  • How long will you expect demand to last for those sales?
  • Do you expect other, more “normal” sales to return as recovery progresses?
  • Set out some timescales for what you expect demand to be for your mix of products or services

What is your new maximum capacity?

It is unlikely that most businesses could fit all their employees back into the same work environment they left in March due to the stricter social distancing rules now in place.  

Each business will be different and the conditions of each week of recovery will be different to the week before. Flexibility is going to be vital. The considerations below may help you work out a plan for how your key productive staff can meet the estimated demand of your customers. 

  • Can a machine be operated with social distancing? 
  • Are work-stations placed too close together?
  • Which members of the team are vital for delivering the service, products or production of your business?
  • How many members of staff can you fit into your business premises safely?
  • Can a shift pattern be arranged to increase overall productive hours, with less staff present at one time?
  • How much support do production team members need from others, can this support be given remotely?
  • Considering all the above, how much capacity does this give you to meet demand? Is it more than your expected demand or less?
  • How many hours work would this provide for each role / employee?
  • Would part time working be an option?

Consideration for employers

Any changes that you are considering for your business that affect your employees and their terms and conditions of employment would need to be conducted fairly with the relevant consultation meetings.  It is crucial that these meetings (which are most likely to be phone calls or zoom meetings) are documented, and you document agreement from both you as employer and the employee. This could include:

  • Reduction in hours from full time to possibly part time
  • Change to an employee’s shift pattern, as to when they actually work
  • Change of role and responsibilities due to covering other employees who may still be furloughed
  • Reduction in pay due to a change of role

The above changes can also be discussed during any redundancy consultations, as alternatives to an employee leaving the business.

Who is willing and able to return to work?

With social distancing continuing and the fact that the pandemic is still raging as employers, we are faced with issues about if our staff are well enough to return to work.  Bringing staff back from furlough is not something that can be done in a purely top down fashion. You will have to ask questions of the furloughed staff about their ability and requirements to return. Some staff may prefer reduced hours where this helps for safety or with their childcare needs.

Issues to consider:

  • Ask the staff who is able to return to work
  • Consider how much notice does each person need to make arrangements to return
  • Which members of the team shielding or self-isolating?
  • Do they have sufficient childcare provision?
  • How acceptable reduced hours (and pay) would be for their initial return
  • Could they do all or part of their work from home?
  • What hours could they work?
  • Would they be willing to work hours outside of normal operating hours?
  • How flexible is their work pattern?

We can help you

Ultimately you need enough information from the above, your management figures and up to date figures on your cash reserves to make an informed decision that balances the cost of bringing an employee back into your work force and the benefit that has to fulfilling sales.

Short term costs will need to be outweighed by the future inflow from customers. Somewhere in the middle of this is the cash reserves available to your business that will most certainly decrease in the initial weeks of recovery as this is the fuel the gets wheels turning again. 

There is no one size fits all solution. If you want to discuss and share ideas, please give your client manager or principal adviser a call. If you’re not a client, call us on 01474 853 856 or email discovery@a4g-llp.co.uk for a free discovery call to see how we can help you and your business.

Contact me today!

Josh Curties

BA (Hons) ACA

Partner & Principal Adviser

01474 853856

Send me a message

Share this article