The ongoing lifeline of the Coronavirus Retention Scheme

Nearly a year since the term was coined, ‘Furlough’ is still on people’s lips and some people’s prolonged reality. Taking organisation’s time up with organising and working out who will stay on this or come back.

The scheme was due to end in October 2020, but will now run until the end of April 2021 to accommodate those affected by lockdown 3.0.

Long-term uncertainty

One in eight workers were furloughed in December, either fully or partly. From an employee perspective, there is the clear advantage that furlough enables them to hold on to their jobs. However, the long-term effect on people must be carefully monitored by employers who still have a duty of care towards employees. People need a purpose, and many have experienced the prolonged effect of furlough and the uncertainty this generates about their future at their organisation demoralising. There is concern that in three months’ time, there will be a fresh wave of redundancies, so keeping open lines of communication to impacted employees is critical.

There is a careful balance between those who see this as a sabbatical and those who fear this could be permanent. Equally, furlough provides 80 per cent of usual pay up to £2,500, meaning that many have been on a reduced salary for months, excluding NIC and statutory pension contributions which are not covered by the scheme and for the employer to pay.

Flexible furlough can address disengagement with the workplace, to an extent, as this gives individuals the option to work some of their usual hours and be put on furlough for the hours they did not work. The psychological impact of these varying arrangements has been carefully monitored with pulse surveys to overcome the fatigue that many feel around the long-term effect of restrictions.

Cultural divisions

From an employer perspective, there is the cultural challenge of ensuring workforces feel integrated when some are furloughed and some are expected to go into work. It is hard to manage the process of selecting those for furlough in the first place, risking division from the outset. The return may be just as fraught. There may also be the need to identify which learning and development programmes each returning employee requires access to, having been out of their roles for months.

On the other hand, furlough is buoying thousands of companies’ headcounts with the financial lifeline it provides. To maintain a sense of unity regardless of circumstances, tailoring support to individuals and actively listening to employees has to be at the heart of your approach to your employees. Listening to the requirements and concerns of each employee has to be a top priority in assessing the appropriate plan of action. Employers will have to accept the various groups and different engagement strategies required. Ongoing employee anxiety around catching Covid-19 until vaccines are rolled out to everyone, combined with settling back into a working environment will be key considerations. Burn out and stress can also affect those who became bored with furlough, or sour from staying on it, so a holistic approach to wellbeing is important.

Changes to accommodate families

Following the school closures at the beginning of this year and the announcement that the earliest return to school will be 8 March 2021, trade-union umbrella body the TUC have even suggested that working parents with caring responsibilities should have temporary legal rights to access the furlough scheme. The HMRC has updated its furlough guidance to confirm that the scheme can be used where employees are unable to work because they are caring for children. The TUC has found that 7 in 10 requests for furlough were being turned down for working mums; furthermore nine out of 10 mums said their mental health had been negatively impacted, experiencing levels of stress and anxiety. The burden on families is clear and employers should consider carefully how they can best support effected employees.

Gaps in funding schemes

MPs and campaigners have been highlighting the millions of UK taxpayers who are not entitled to special funding schemes during the pandemic. There are those that earn half of their earnings from self-employment, making them ineligible for the Self-Employment Income Support Scheme. Whilst some will have an employer, therefore covered by the Coronavirus Job Retention Scheme, HMRC estimates that 1.4 million people are not covered because of the 50 per cent rule. If someone worked part-time while trying to establish their own self-employed business, they may not be able to access financial support. Equally, if someone receives 50 per cent of their income from rent paid to a property, investment incomes or a pension, that will also disqualify them.

According to the BBC, in addition to those not covered by the SEISS, there are a further 400,000 short-term contractors moving between jobs; 200,000 newly self-employed who had not submitted a tax return yet; 710,000 limited-company directors who pay themselves through dividends; and 225,000 who earnt over £50,000 who have no financial recourse. The latter feels at odds with those receiving support of up to £2,500 on the furlough scheme even if they earn an income over £50,000. These people are in addition to those who have lost their jobs as a result of the pandemic, relying on benefits that are dependent on factors such as children, savings and other income, which are not accounted for in the coronavirus support schemes. The NAO, Treasury Committee and Public Accounts Committee have recommended further reviews into how to support everyone given these stark figures.

A fifth extension?

The government has extended the scheme four times already. Chancellor Rishi Sunak is reportedly considering extending the scheme that has helped to retain millions of jobs during lockdown. This will very much depend on the proposed roadmap out of lockdown and whether businesses can reopen ahead of summer.

Managing the effects of furlough

Overcome divisions in your workforce and inform your people strategy by addressing the immediate implications of the furlough scheme across your organisation. We can help you to prioritise employee engagement and design tailored strategies to address and combat employee concerns directly – call us today.