Tag: furlough

Bleak outlook as a third of firms set to cut jobs over coming months

Results from the British Chamber of Commerce’s Quarterly Recruitment Outlook, in partnership with Totaljobs, reveal the impact Coronavirus has had on the jobs market, with the two organisations calling for further action from government to protect businesses and jobs.

  • 29% of businesses expect to decrease the size of their workforce in the next three months
  • 28% decreased size of workforce in Q2 but 66% kept their workforce constant, reinforcing the success of the Job Retention Scheme
  • The two organisations call for a cut in employer National Insurance Contributions to protect businesses and jobs.

The leading business organisation’s landmark survey, which serves as a barometer of the UK labour market, received 7,400 responses and is the largest of its kind in the UK.

Fieldwork was done prior to the Chancellor’s Summer Statement which announced the Job Retention Bonus, Kickstart Scheme and an Apprenticeship Recovery programme, among other things.

Redundancies expected

29% of businesses expect to decrease the size of their workforce in the next three months before the government’s Job Retention Scheme ends, the highest on record.59% will keep headcount the same and just 12% will look to increase the size of their workforce.

The news comes as businesses across the UK economy announced significant redundancies. The survey found that over the next three months:

  • 18% of micro firms (with fewer than 10 employees) expect their workforce to decrease.
  • 41% of small and medium firms (with 10 to 249 employees) expect their workforce to decrease.
  • 41% of large firms (with over 250 employees) expect their workforce to decrease.

The survey reinforced data from the BCC’s Quarterly Economic Survey of the challenging environment business communities across the UK are facing, with record falls in key indicators of business activity, including domestic and export sales, cashflow and investment.

Recruitment

The percentage of businesses attempting to recruit in the previous quarter fell to 25%, the lowest level on record. Of the firms that attempted to recruit, 65% faced recruitment difficulties, particularly for skilled manual/technical or managerial roles.

Success of the Job Retention Scheme

While 28% of respondents decreased their workforce in Q2, two in three firms kept staffing levels constant. This reflects data on the success of the Job Retention Scheme, with the BCC’s Business Impacts Tracker indicating that around 70%of businesses had furloughed a portion of their staff.

Beginnings of recovery?

As lockdown lifts, Totaljobs have seen a 30% month-on-month increase in the number of jobs being advertised on their website for June, with the largest volume posted in IT (20k), logistics (12k) and social care (9k).

There were also month on month increases in sectors benefiting from lockdown easing like retail (+51%), travel (+47%) and hospitality (+23%). Skilled trades also started to see growth compared with previous weeks, with jobs advertised increasing by57%.

Unsurprisingly, applications per vacancy were up across all sectors, reflecting continued rises in candidate activity on the Totaljobs site.

Further action needed

The two organisations have called on the government for further action to limit the damage to the UK labour market, including reducing the overall cost of employment, through a temporary cut in employer National Insurance Contributions and support to upskill and reskill employees as businesses adapt to change.

BCC Co-Executive Director Hannah Essex said: “Our research demonstrates the Chancellor’s focus on protecting, supporting and creating jobs is exactly what’s needed to drive the UK’s economic recovery in the coming months.

“Many businesses are suffering from an historic cash crunch and reduced demand, meaning firms will still face tough decisions despite welcome interventions made in the Summer Statement.

“The government should consider additional support for employers before the Autumn Budget to reduce the overall cost of employment and prevent substantial redundancies.Measures could include a temporary cut in employer National Insurance Contributions and support to upskill and reskill employees as businesses adapt to change.”

Totaljobs CEO Jon Wilson said: “The latest figures from the Quarterly Recruitment Outlook make stark reading, especially when compared to what we had grown accustomed to in previous years. It is clear that business confidence is low, with many being forced to make difficult decisions when it comes to their workforce.

“However, the Chancellor’s summer statement outlined a number of measures that will not only support jobs but help create new roles in the economy and give confidence to businesses trying to plan for the future. The interim cuts in stamp duty and VAT should give the hard-hit housing and hospitality sectors a much-needed boost.

“It’s clear that moving forward, adaptability remains paramount for businesses and people, with upskilling, reskilling and utilising transferable skills all key factors during this recovery period. 

“To protect jobs and further ease the burden facing businesses, we join the British Chambers of Commerce in their call for a cut in employer National Insurance. We also urge the Chancellor to continue to consider the needs of the sectors and demographics most impacted by Covid-19, to protect people’s livelihoods and help the jobs market and wider economy pick up.”

Commenting on the latest employment figures published today (Thursday), which show around 650,000 fewer paid employees since before the pandemic, TUC General Secretary Frances O’Grady said:  “There’s a national disaster unfolding, with vacancies at an all-time low and more jobs lost every day, but ministers are watching from the side-lines, instead of saving jobs with targeted support for the hardest-hit sectors like retail, manufacturing and aviation. 

“The more people we have in work, the faster we will work our way out of recession. If the government doesn’t go all out to protect and create jobs, the economic crisis will be longer and harder. 

“We can create jobs by fast-tracking infrastructure projects. This would speed up the delivery of faster broadband, more childcare, green technology, modern transport and housing. And it would create over a million jobs across the UK.” 

You can view the full QRO report at the link below:

BCC QRO Q2 2020

Council to place 500 staff on furlough

As the City of Edinburgh Council announces 500 staff will go on furlough, UNISON has stepped up to ensure they are protected and has called for long term investment to protect local jobs and services after years of cuts.

Tom Connolly, UNISON City of Edinburgh branch secretary, said: “Our members have responded heroically to the challenges posed by the COVID-19 crisis – providing support to the most vulnerable members of our communities, looking after the children of key workers and collecting our refuse to name but a few examples.

“As we begin to move out of lockdown our communities will need even more support than ever before. After years of cuts, only sustained long term investment will protect jobs and services at Edinburgh City Council.”

The union has ensured that furloughed staff will continue to get full pay and pensions contributions.

Tom Connolly added: “It is regrettable that UNISON members may be finding out about the councils furlough announcement through the media.

The unions had initial contact from the employer on Monday (8 June) about the proposal to furlough groups of staff.  Immediate reassurance was sought and given that every member of staff would continue to receive full pay, full pension contributions, and all other benefits associate with their job during the period of furlough.

“It was also recognised that by using the furlough scheme in what had to be specific income generating sectors, and had needed to be closed down due to COVID-19,  the council would benefit financially by the sum of £500,000 .

“We continued in dialogue with the employer up to late on this afternoon and are fully confident that our members affected will be fully protected, we would accept nothing less.

“What is  clear, our council has suffered year in and year out from the constant cuts to funding from both the Westminster austerity agenda and real term cuts to local government funding from the Scottish government. The huge responsibilities placed on local government by the pandemic has massively impacted on an already precarious financial position.

“The issue of funding for council services now and in the future must be addressed and all costs associated with the provision of added services resulting from COVID-19 should be fully met by the Scottish Government.

“As we begin to move out of lockdown our communities will need even more support than ever before. Only sustained long term investment will protect jobs and services at Edinburgh City Council.

“Negotiating on behalf of and supporting our members during this time of crisis has been of paramount importance to UNISON and that is what we will continue to do.”

Chancellor extends furlough scheme until October

The government’s Coronavirus Job Retention Scheme will remain open until the end of October, the Chancellor announced today.

  • Coronavirus Job Retention Scheme will continue until end of October
  • furloughed workers across UK will continue to receive 80% of their current salary, up to £2,500
  • new flexibility will be introduced from August to get employees back to work and boost economy

In a boost to millions of jobs and businesses, Rishi Sunak said the furlough scheme would be extended by a further four months with workers continuing to receive 80% of their current salary.

As we reopen the economy (at least in England – Ed.), we need to support people to get back to work. From the start of August, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.

The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month.

Chancellor Rishi Sunak said: “Our Coronavirus Job Retention Scheme has protected millions of jobs and businesses across the UK during the outbreak – and I’ve been clear that I want to avoid a cliff edge and get people back to work in a measured way.

“This extension and the changes we are making to the scheme will give flexibility to businesses while protecting the livelihoods of the British people and our future economic prospects.”

New statistics published today revealed the job retention scheme has protected 7.5 million workers and almost 1 million businesses.

The scheme will continue in its current form until the end of July and the changes to allow more flexibility will come in from the start of August. More specific details and information around its implementation will be made available by the end of this month.

The government will explore ways through which furloughed workers who wish to do additional training or learn new skills are supported during this period. It will also continue to work closely with the Devolved Administrations to ensure the scheme supports people across the Union.

The Chancellor’s decision to extend the scheme, which will continue to apply across all regions and sectors in the UK economy, comes after the government outlined its plan for the next phase of its response to the coronavirus outbreak.

The scheme is just one part of the government’s world-leading economic response to coronavirus, including an unprecedented package for the self-employed, loans and guarantees that have so far provided billions of pounds in support, tax deferrals and grants for small businesses.

Today the UK government is also publishing new statistics that show businesses have benefitted from over £14 billion in loans and guarantees to support their cashflow during the crisis.

This includes 268,000 Bounce Back Loans worth £8.3 billion, 36,000 loans worth over £6 billion through the Coronavirus Business Interruption Loan Scheme, and £359 million through the Coronavirus Large Business Interruption Loan Scheme.

Mike Cherry, National Chairman of the Federation of Small Businesses, said: “The Job Retention Scheme is a lifeline which has been hugely beneficial in helping small employers keep their staff in work, and it’s extension is welcome.

“Small employers have told us that part-time furloughing will help them recover from this crisis and it is welcome that new flexibility is announced today.

BCC Director General Adam Marshall said: “The extension of the Job Retention Scheme will come as a huge help and a huge relief for businesses across the UK.

“The Chancellor is once again listening to what we’ve been saying, and the changes planned will help businesses bring their people back to work through the introduction of a part-time furlough scheme. We will engage with the Treasury and HMRC on the detail to ensure that this gives companies the flexibility they need to reopen safely.

“Over the coming months, the government should continue to listen to business and evolve the scheme in line with what’s happening on the ground. Further support may yet be needed for companies who are unable to operate for an extended period, or those who face reduced capacity or demand due to ongoing restrictions.”

Dame Carolyn Fairbairn, CBI Director-General, said: “The Chancellor is confronting a challenging balancing act deftly. As economic activity slowly speeds up, it’s essential that support schemes adapt in parallel.

“Extending the furlough to avoid a June cliff-edge continues the significant efforts made already and will protect millions of jobs.

“Introducing much needed flexibility is extremely welcome. It will prepare the ground for firms that are reawakening, while helping those who remain in hibernation. That’s essential as the UK economy revives step-by-step, while supporting livelihoods.

“Firms will, of course, want more detail on how they will contribute to the scheme in the future and will work with government to get this right.

“Above all, the path of the virus is unpredictable, and much change still lies ahead. The government must continue to keep a watchful eye on those industries and employees that remain at risk. All schemes will need to be kept under review to help minimise impacts on people’s livelihoods and keep businesses thriving.

“The greater the number of good businesses saved now, the easier it will be for the economy to recover.”

Commenting on the extension of the government’s job extension scheme today, TUC General Secretary Frances O’Grady said: “We are pleased ministers have listened to unions and extended the job retention scheme to the autumn. This will be a big relief for millions.  

“Changing the rules to allow part-time working is key to enabling a gradual and safe return to work. And maintaining the rate at 80% is a win for the pay packets of working families.

“As the economic consequences of Covid-19 become clear, unions will keep pushing for a job guarantee scheme to make sure everyone has a decent job.”

Anneliese Dodds MP, Labour’s Shadow Chancellor, said: “The furlough scheme is a lifeline for millions. The Government was right not to pull it away.

“It is welcome that the Chancellor has heeded the call by Labour, trade unions, and businesses for more flexibility in the scheme, to support employees to go back to work part-time.

“The government must clarify today when employers will be required to start making contributions, and how much they’ll be asked to pay. If every business is suddenly required to make a substantial contribution from the 1st August onwards, there is a very real risk that we will see mass redundancies.”

Extension to Furlough Scheme could cost the Government £70 billion

The Chancellor has extended the current Furlough scheme until the end of October but he now has a huge challenge to get this right, say leading tax and advisory firm Blick Rothenberg.

Heather Self a partner at the firm said: “He needs to achieve a “Goldilocks” effect – not too hot, and not too cold.  If he provides too much it will be very expensive and may discourage firms from reopening. If he provides too little thousands of people could lose their jobs.

She added: “It is going to be a turbulent time for the labour market in the Autumn. Some sectors, such as the hospitality and tourism sector, are likely to see significant redundancies, while others such as construction and financial services will be relieved to see a gradual winding-down of support.

From the announcement today, we now know that:

–          Support will be continued to the end of July in full, with employers required to contribute after that date.

–          Part time working will be permitted, but only for some employees

–          The same level of overall support – 80% of wages up to a maximum of £2500 a month – will be maintained

Heather said: ” As the furlough scheme is reduced the Government needs to incentivise business and come up with creative ideas about how business can keep going and retain staff.

“The Chancellor could not go on paying out billions of pounds indefinitely, and everyone understands that, but there needs to be much more joined up thinking between Government and business.”

So far, some 7.5m employees have been furloughed, at a cost approaching £10bn.

The expected costs to the end of July are likely to be around £50bn, with the extension at a reduced level to the end of October perhaps costing a further £20bn.  These are very significant sums, amounting to around 10% of total Government receipts.

As Britain seeks to get back to work, the pressures on different sectors will be very uneven.

While some sectors, such as construction and financial services, are getting back to work, others such as leisure and hospitality will be much slower to recover.

And the position in the tourism and heritage sectors is likely to become critical if they lose the whole of the Summer season.

Heather Self said: “Enabling part time work is welcome, as it will permit a gradual return to work.  But the Chancellor said this would only be available to businesses “currently using” the scheme – it is not clear what the cut-off date will be for businesses still considering whether they need to furlough employees.

“The Chancellor needs to pay attention to the needs of different sectors, difficult though this may be.  Leisure and hospitality businesses are unlikely to be able to cope with reopening fully by the end of July, and may need to contemplate redundancies.

“Additional support beyond the furlough scheme will be needed for a long time – whether loans such as the CBILS scheme, or grants, or incentives such as an increase in the Employment Allowance to encourage employers to maintain their staff levels, or even take on new employees.”

Employment Q & A for Furloughed Staff

HELP IS being offered to employers and furloughed employees who are grappling with multiple questions when it comes to managing the new furlough process.

Gilson Gray has issued guidance on the main points from new Government advice for employers and furloughed employees, covering such issues as can employees take on an additional job, does salary include benefits, what happens to holiday leave?

Graham Millar, Employment Law Partner at Gilson Gray, said employers and their employees can now be better informed on key issues around calculating salaries, additional work, and holiday entitlements.

Graham said: “Furloughed employees are now expressly allowed to take on additional employment for different employers, but only if their old employment contract allows it. If your contract doesn’t mention additional work, your employer is able to change it to allow you to take on a second job.

“For employers calculating a salary, you can’t include non-monetary benefits, like the value of a company car, within the 80% payment rule. Whether you can include car allowances remains to be clarified by the Government.

“It’s good news for employees whose income relies on commission payments – your employer can add in “compulsory”, meaning contractual, commission from HMRC as well as your basic salary before calculating the 80% figure.”

More good news comes for employers of smaller businesses, as the Government has now said employees can be furloughed multiple times, as long as each furlough period is a minimum of three weeks. This allows employers or smaller businesses to rotate their available workforce.

Graham added: “There’s still no formal guidance on the issue of holiday leave and holiday pay for furloughed workers, which means the Working Time Regulations still apply as normal.

“Under those regulations, employers can tell employees when to take holidays if they give enough notice, and a lot of employers will want employees to use some of their accrued holidays during furlough so they can avoid weeks’ worth of holiday requests after the lockdown has ended.

“While the Government has extended how long you can carry holidays for, it makes sense for people to use holidays while on leave – but questions remain as to whether holiday pay affects ‘salary’ in terms of the Job Retention Scheme. We’re hoping this will be clarified soon.”

A full version of this guidance is available on: 

https://gilsongray.co.uk/insights/covid-19-governments-job-retention-scheme-what-about-holiday-leave-and-holiday-pay/

The Employment Team at Gilson Gray will continue to publish updates and information for employers and employees on its website News and Insights blog, https://gilsongray.co.uk/news-insights/

All of the teams at Gilson Gray are continuing to maintain the firm’s excellent, high quality service to clients, providing a full range of legal services throughout the pandemic. 

For more information on Gilson Gray and its services, please visit: http://gilsongray.co.uk/

Hints and tips on managing money if you’ve been furloughed

The Government’s furlough scheme allows for 80% of salary, up to £2,500, to be reclaimed by the employer per month. 

Many companies are now taking advantage of this scheme in order to protect cash and ensure the longevity of the business when social distancing restrictions can be lifted later in the year, say tax and advisory firm Blick Rothenberg.

David Hough a partner at the first said: “For many employees this is a far better outcome than losing their job altogether, maintaining a slightly reduced income and in all likelihood being able to return to the same place of work later.

“However, many families will still feel the impact of this over the next few months whether it be from being placed on furlough, reduced income from the Government’s Self-Employed Income Support Scheme or loss of income altogether.”

He added: “There are some things that many people can do to help manage over the next few months.”

Remove your salary sacrifice deductions

Plenty of employees contribute into a pension pot through salary sacrifice deductions. It is important to save for your retirement, and the Government encourages this by making such deductions tax free, however removing or reducing these payments will increase your take home pay in the next few months. You can top up your pension later in the year when you have more certainty over your income.

Review your direct debits

Review your direct debits with your family to check you aren’t paying for things that you don’t really need. Gym memberships cannot be used at the moment and should be cancelled or deferred. Families should make sure they are not paying for multiple streaming services, or sports packages for which there is no live action. Companies like Spotify offer family memberships which will save money if a household has more than one account holder.

Defer some payments

Payment deferrals, including mortgage deferrals and other loan holidays, should be agreed with the other party but this approach should mean that you can continue pay for crucial items whilst catching up on other payments later in the year.

Many of us pay for our utilities on a monthly basis which is helpful because it means we can predict our monthly spend. However, you might have built up a credit for gas and electric or contributing more than you will actually use in the warmer months coming up. There is an opportunity to schedule these costs differently to help manage through this more challenging time.

Prepare a six-month budget

If you feel that your available cash is going to be less than normal for the next few months you should aim to make a six-month plan and budget your income and expenses over that period.

If restrictions are lifted in the early summer many people will gradually see their incomes return to a normalised level in months four to six.

You will find it helpful to see that your payments can be managed over a longer period and it will also highlight if there are items you are spending money on that you may need to cut back on at early stage.

What are the rules if you’re temporarily laid off?

If you’re one of the workers who’ve been asked to go on furlough, make sure you know your rights.

The coronavirus outbreak has put the UK economy under immense strain, with businesses across the country shutting down to prevent the spread.

After discussions with trade unions, the government is to plough billions of pounds into a furlough scheme that will see the taxpayer give businesses 80 per cent of the wages of those employees who are temporarily laid off.

This should stop those business suffering a drop-off from making workers permanently redundant. It will ensure that more workers have enough money to cover their bills and leave businesses well-placed to ramp up activity once demand picks up again.

But while measures to protect jobs are welcome, it’s important that employers follow the rules when sending staff on furlough.

And if you’re one of the workers who’ve been asked to go on furlough, make sure you know your rights.

Despite the government having recently published guidance on how the scheme will operate, there are still a number of unanswered questions about the scheme. But this is what we know right now:

Bosses must follow the rules

Bosses can’t just stick workers on furlough or shorter hours.

An employee is regarded to have been laid off during a particular week if the employer does not have sufficient work for the employee and the employee is not paid as a result. (s.147(1) of the Employment Rights Act 1996).

What does your contract say?

If your contract contains the right for the employer to impose a lay-off, they can simply do so.

But it needs to be for a reasonable period of time, not indefinite.

Collective agreements between employers and unions will normally include provision for minimum payments if employees are laid off for a period.

If it’s not in the contract, then the employer needs your written, informed consent. And they have to make it clear how long the lay-off will be.

The lay-off has to be kept under review and the employer must seek further consent if it lasts longer than expected.

What happens if this isn’t in your contract and you say “no”?

If an employee or their union objects to the lay-offs, the employer cannot simply impose it.

If workers say “no” and the employer attempts to press ahead, employees can resign and claim unfair constructive dismissal, and possibly also claim a statutory redundancy payment.

Or they can continue in employment but claim any shortfall in pay under the unauthorised deduction of wages laws.

This is especially helpful if you haven’t got the two years’ service needed to claim unfair constructive dismissal.

How much will I get paid?

The government will stump up 80 per cent of the wage costs of those laid off. It will also cover employer costs such as their National Insurance and pension payments at the minimum legal level.

It will only cover basic salary and not commission payments and is capped at £2.500 a month. This means that, as it stands, those who currently receive piece work “bonuses” would see their income fall substantially.

Employers can, and we believe should where they can afford it, top up wages to 100 per cent.

If your pay varies, your employer can claim for the higher of either the same month’s earnings from the previous year or average monthly earnings from the 2019-20 tax year.

Who does it cover?

Employees who are paid via Pay as You Earn payroll, which is likely to include a number of agency workers as well as those working via zero hours arrangements. They must have been on the organisation’s payroll as of 28 February 2020.

The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.

But, as it currently stands, those workers who have gone onto short-time working will not be covered by the scheme. Those workers will not have their wages topped up to normal levels.

What about the self-employed?

The self-employed (or at least most of them) are covered by a separate Self Employed Income Support Scheme.

Am I entitled to redundancy payments?

An employee who has agreed to furlough (or to short-time working) either for four consecutive weeks or for a total of six weeks (no more than three being consecutive) in any period of 13 weeks can resign and claim a redundancy payment.

How do employers decide who goes on furlough?

Employers must use a fair process for selecting employees for furlough and be very clear about why they are making certain decisions.

They must be careful not to discriminate against particular groups of workers who are protected by equality law, either directly or indirectly.

For example, they must not choose to furlough a worker because their race or because they are pregnant, to do so would be direct discrimination.

Similarly, they should not ask disabled workers to agree to a temporary lay-off to avoid putting in place reasonable adjustments that would allow them to continue working during the current outbreak.

Examples of indirect discrimination would be selecting workers for furlough because of their caring commitments, a group of workers in which women are overrepresented.

I have two jobs. If I am furloughed from one, what happens to the other?

Each furlough arrangement applies to a single job you do. So you can continue working in one job while furloughed from another. The pay cap applies to each employer individually.

Can my employer give me work to do during furlough?

No. A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for their employer.

But if you are asked to do training you must be paid at least the minimum wage/National Living Wage, even if this is more than the 80 per cent of wage that will be subsidised by the government.

Tim Sharp, TUC