End of furlough: are you prepared?

The government’s Coronavirus Job Retention Scheme (CJRS) will come to an end on Thursday September 30.

Furlough was introduced in the first lockdown of 2020 following the financial struggles of thousands of businesses

Employers were given the option to furlough workers instead of making them redundant, with the government paying a certain amount of an employee’s pre-tax monthly salary.

The end of furlough at the end of September means that some employers will have difficult choices to make.

The Chartered Institute of Personnel and Development (CIPD) has spelled out some of those on its website.

It says that apart from a full return of furloughed staff – with additional recruitment in some cases – there are several options, depending on the needs of the business.

These could include agreeing temporarily reducing working hours with some or all staff, or considering other strategies, including natural wastage, recruitment freezes, stopping or reducing overtime and offering early retirement to volunteers – subject to complying with age discrimination law.

The CIPD says retraining or redeployment, sabbaticals and secondments, pay freezes or short time working could be other alternatives to considering redundancy.

It is important to take advice on the HR and legal aspects of taking and carrying out some of these choices, including ensuring the correct consultation is carried out.

Businesses also need to be aware of the health and wellbeing aspects of a return to work for staff who may have been away for some time.

CIPD says that some form of ‘re-induction’ process should be considered, and managers should talk people on an individual basis if they have concerns.

Its advice also says that, depending on your business plans, some form of hybrid working or a ‘phased’ return might be suitable.

If you have an Employee Assistance Programme, or other professional support, you may want to signpost staff to that.

CIPD adds: “Ensuring all staff are aware of the health and safety steps you have taken to minimise Covid related risks is important, but people may have additional mental health issues about the return, and you need to be able to address them.”

It is also important to keep everyone fully in the picture about the business and its future direction. Good communication will help things go more smoothly.

The end of furlough, coupled with the repayment of Covid loans, makes it even more vital that businesses manage their cash flow.

There may be increased costs as staff return, with some needing retraining, adding to the pressure.

Businesses that manage their cash well will come out of this stronger. Keep on top of your cash flow forecasts.

Look at your payment terms and see if they need to be changed to meet the new climate. Do you need to ask for more payment up front? Have honest conversations with suppliers and customers.

Control your costs. Look at your overheads to make sure you are getting the best deals possible.

Assess your office systems and purchasing and ordering processes to make sure you are not incurring unnecessary costs.

Ensure that your stock control is in order and is fit for purpose. Again, are the right processes in place? Now is the time to re-evaluate.