With the furlough scheme holding back a tsunami of employment issues, Sue Tumelty of The HR Dept offers advice on how UK businesses can deal with the impending crisis.
Businesses across the UK were given a lifeline in March when the Chancellor Rishi Sunak announced the Coronavirus Job Retention Scheme.
The entirely new system – furloughing, as it’s now commonly called – gave company owners some breathing space to survive and adapt their business models to meet the unique challenges posed by the pandemic.
Since it was announced, we at The HR Dept have been exceptionally busy helping our clients to strategise and administer the deployment of furloughing among their workforces.
We have also used our network of contacts in the corridors of power to successfully campaign for a flexible element to the scheme on behalf of smaller businesses, and to make sure the introduction of this was brought forward to early July, rather than the start of August as originally planned.
As we all know, however, there has been a storm looming on the horizon for months, an unavoidable employment crisis which is bound to come as the Job Retention Scheme comes to an end.
Businesses in the franchise sector – franchisees and franchisors alike – are now faced with a series of difficult decisions about their people strategies.
So what are the options for companies now? How do you, as a business owner, ensure the short-term survival of your company whilst also bearing in mind a long-term strategy for sustained success?
Explore your options
There are several options: keeping employees on under secure environments or at home; reducing hours worked or pay; or, more creatively, offering sabbaticals rather than making redundancies. Decisions taken will depend on the business but there are commonalities to consider.
For starters, it is worth bearing in mind that the Government has promised to pay businesses a £1,000 bonus for each person they bring back after the furlough scheme ends, as long as those employees are kept on through to January.
So while it may be tempting to divert directly to redundancy as the least risky option, I would advise caution before losing valuable experience and training from any business.
Business owners should consider reducing hours worked as an option, as well as the potential for bringing back employees full-time, albeit it under appropriate health and safety conditions.
If you are introducing reduced hours, then you will need to consult with your staff about the proposals, and the reasons for them and you must agree the changes with them in writing.
But be realistic about the ability of your business to return to pre-lockdown levels. If it is reasonable to expect your company to do so, then there should be no obligation to part with staff.
The value of good consultation
We are all sailing unchartered waters, providing a whole set of new challenges. Before shedding valuable expertise from your business, why not give your employees the opportunity to consider and respond to any proposed changes as well as asking for their feedback or input on any possible alternatives?
I would urge you to think of this consultation process as more than just a box-ticking exercise. The most sensible business owners will look at it as an opportunity.
You may think redundancy is the only option, but you might be surprised with the ideas your employees come up as alternatives.
Whether you take up this opportunity or not, the law says that consultations must be “meaningful”, or the redundancy could be considered unfair. With no fees for employment tribunals now, be careful you do not expose yourself to significant risk by managing this process poorly.
If redundancies are your only option, be compliant
Despite the economy’s return to relatively good health, warnings remain that over half of UK businesses will be forced to lay off staff within three months of the furlough scheme ending.
If 20 or more employees are affected by these changes, then representatives will need to be elected as part of the collective consultation process.
And if you are forced into making redundancies, then you must meet certain stipulations in terms of consulting with staff over appropriate time periods before giving notice.
Many franchises will be small businesses and if you’re looking to make fewer than 20 people redundant, there’s no minimum time for a consultation. However the consultation must be considered “meaningful”.
For between 20 and 99 employees, you must consult for at least 30 days, while for 100 or more, the period must run for 45 days or more.
In terms of the information to representatives or staff, you must provide: the reasons for redundancies; the numbers and categories of employees involved; the numbers of employees in each category; how you plan to select employees for redundancy; how you’ll carry out redundancies; and how you’ll work out redundancy payments.
You’ll then need to provide notice – statutory notice is one week for someone who’s worked for the company for between one month and two years; a week’s notice for every year between two years and 12; and 12 weeks if they’ve been with you for more than 12 years, or their contractual notice.
Watch out for discrimination
There are also a number of challenges around potential discrimination when choosing who to lose – ones which business owners may easily gloss over given everything else they have to think about.
There are nine protected characteristics under the Equality Act 2010: age; disability; gender identity; pregnancy and maternity; marriage and civil partnership; race; religion and belief; sex; and sexual orientation. Of course people falling into these categories can be made redundant, but on the basis of their abilities and the genuine needs of the business, not on these categories alone.
For example there are risks here over those who may not be able to work because of an ‘underlying medical condition’ which is actually a disability. Mothers looking after children whose schools are not open could be victims of indirect sex discrimination. If these people have not been able to work during this crisis, have missed training as a result and are now first in line for redundancy as a result, this may be considered discrimination.
Help is at hand
Alongside the support already given to businesses by the UK Government, additional help is at hand. This includes funding from the England European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014 to 2020, which offers £20 million allocated to local Growth Hubs to support SMEs.
Activities include small grants of between £1,000 and £5,000 to help visitor economy businesses in particular – hotels and guest accommodation, indoor and outdoor attractions, for example – with specialist professional advice.
HR has often been seen as an administrative role and a ‘nice to have’ for employees. This crisis has demonstrated the value of what we provide as business strategists. So use our expertise – you are not alone.
