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Furlough is finally coming to an end, now what?

Here we offer some guidance for employers who will soon have to deal with the reality of how to manage without government support for wages.

1 minute read

Published 27 September 2021

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On 30 September 2021 the government will formally end the Coronavirus Job Retention Scheme (CRJS) after around 18 months of operation, with the final claims being made in October.

In recent months many employers have returned staff from furlough leave, either fully or partially, with many taking up the flexible furlough option. However as of 31 July (at the time of writing figures for August and September are not reliable as claims are still being received or amended, or not yet released) 1.5 million people were still furloughed, with just over 50% still on full furlough.

Business as usual?

If they haven’t already, many employers will soon have to deal with the reality of how to manage without government support for wages, when the economy is yet to return to its pre-pandemic levels. Many industries are banking on a busy Christmas period to assist with recovery.

But there is some hope that within the first half of 2022 we will see the economy return pre-pandemic levels. Although as of July 2021 the economy is reported to still be 2.1% below its pre-pandemic level in February 2020 and growth is forecasted to be uneven.

Weathering the storm

Given the potential for a strong economic recovery many employers are looking to avoid redundancies in the short term, or have perhaps already gone through a redundancy procedure and are operating with a skeleton workforce that they can’t afford to let many more go without jeopardising operations.

Redundancy remains an option to employers who, for example, experience a reduced need for a particular kind of work. It could even invite applications for voluntary redundancy to avoid a formal procedure. However, there are alternatives that employers may want to consider first if they anticipate a need to retain headcount.

Employers could consider reorganising their workforce to accommodate the needs of their business post-pandemic, this could include releasing consultants or agency staff.

Employers can be creative in utilising existing policies to help manage or reduce overheads, for example: stopping overtime; stopping or delaying pay rises and bonuses; requiring staff to take their annual leave entitlement; utilising any lay off or short working policies that may apply; and granting unpaid leave or career breaks.

The above is of course subject to any contractual considerations and the need to act in a non-discriminatory manner in order to avoid incurring any liability.

Flexible working

Of course, this is not applicable to everybody, but during the pandemic many people experienced a real benefit from flexible and home-working in terms of their general wellbeing and mental health. Expectations of flexible working are increasing and employers may be able to harness this trend to their advantage if they can use flexible working to reduce their wage bill or do away with large expensive offices.

If we have learnt anything in the last 18 months is that the future is uncertain. But employers can, and are, taking steps to rebuild and fortify their businesses. Employers have done admirably in weathering the storm so far, and there is nothing to indicate they can’t continue doing so.

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Shorter Reads

Furlough is finally coming to an end, now what?

Here we offer some guidance for employers who will soon have to deal with the reality of how to manage without government support for wages.

Published 27 September 2021

Associated sectors / services

  • Employment law for employers
  • Employment law for employees

On 30 September 2021 the government will formally end the Coronavirus Job Retention Scheme (CRJS) after around 18 months of operation, with the final claims being made in October.

In recent months many employers have returned staff from furlough leave, either fully or partially, with many taking up the flexible furlough option. However as of 31 July (at the time of writing figures for August and September are not reliable as claims are still being received or amended, or not yet released) 1.5 million people were still furloughed, with just over 50% still on full furlough.

Business as usual?

If they haven’t already, many employers will soon have to deal with the reality of how to manage without government support for wages, when the economy is yet to return to its pre-pandemic levels. Many industries are banking on a busy Christmas period to assist with recovery.

But there is some hope that within the first half of 2022 we will see the economy return pre-pandemic levels. Although as of July 2021 the economy is reported to still be 2.1% below its pre-pandemic level in February 2020 and growth is forecasted to be uneven.

Weathering the storm

Given the potential for a strong economic recovery many employers are looking to avoid redundancies in the short term, or have perhaps already gone through a redundancy procedure and are operating with a skeleton workforce that they can’t afford to let many more go without jeopardising operations.

Redundancy remains an option to employers who, for example, experience a reduced need for a particular kind of work. It could even invite applications for voluntary redundancy to avoid a formal procedure. However, there are alternatives that employers may want to consider first if they anticipate a need to retain headcount.

Employers could consider reorganising their workforce to accommodate the needs of their business post-pandemic, this could include releasing consultants or agency staff.

Employers can be creative in utilising existing policies to help manage or reduce overheads, for example: stopping overtime; stopping or delaying pay rises and bonuses; requiring staff to take their annual leave entitlement; utilising any lay off or short working policies that may apply; and granting unpaid leave or career breaks.

The above is of course subject to any contractual considerations and the need to act in a non-discriminatory manner in order to avoid incurring any liability.

Flexible working

Of course, this is not applicable to everybody, but during the pandemic many people experienced a real benefit from flexible and home-working in terms of their general wellbeing and mental health. Expectations of flexible working are increasing and employers may be able to harness this trend to their advantage if they can use flexible working to reduce their wage bill or do away with large expensive offices.

If we have learnt anything in the last 18 months is that the future is uncertain. But employers can, and are, taking steps to rebuild and fortify their businesses. Employers have done admirably in weathering the storm so far, and there is nothing to indicate they can’t continue doing so.

Associated sectors / services

  • Employment law for employers
  • Employment law for employees

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