Is the ‘all or nothing’ furlough system causing more problems for small businesses?

Businesses have supported a call to modify the Coronavirus Job Retention Scheme (CJRS), to prevent problems which they say could cause workforce resentment and hamper business recovery.

While welcoming the Government’s landmark offer to provide 80% of salary to furloughed employees, business owners say some kind of part-furlough scheme is desperately required.

To help keep them ticking over during the coronavirus crisis, many businesses need skeleton staff to carry out, for example, administrative and sales roles.

However these staff are often not needed on a full-time basis so cannot be paid for their full hours, while conditions of the CJRS say that furloughed employees receiving Government support must not do any work at all.

The situation is leaving many employers struggling to balance the need for the work to be done with the unfairness of asking some employees to work reduced hours for significantly less pay, while their colleagues take 80 per cent pay for sitting at home in the sunshine.

In the North West, HR expert Jill Bottomley of The HR Dept Trafford and Warrington represents numerous clients who, despite being grateful for the lifeline, have raised the issue with her.

“In 31 years in HR, I have never heard of the furlough system,” she said. “It’s an exceptional measure and is gradually being understood and applied by businesses. For many of them, it’s extremely welcome.

“However, there are some serious business issues that have not been addressed. If not acted upon swiftly they will cause significant employee relations rifts, commercial decisions being made for the wrong reasons and a ‘split’ workplace and society, at a time when we have to be more collaborative and deal with this health crisis together.

“The ‘all or nothing’ aspect of the CJRS furlough system means that business owners are either forced into invoking or agreeing short-term working terms with employees they need to continue, doing the work themselves or not doing the work at all.

“None of these situations are ideal. The first solution has great potential to cause resentment between employees kept on for less pay, versus colleagues who are at home on 80% pay.

“The second solution can cause additional stress for a business owner who is probably already struggling in many ways in the current situation. And not doing the work at all will prevent businesses from recovering from this situation when the crisis is over. I think there is time to address these concerns before they become divisive but urgent action is needed.

“What we need is an additional ‘short-time working scheme’ and for non-working days to pay not the guarantee statutory pay of £30 per day (currently at a maximum of five days) but increase this to 80% of daily pay capped at circa £115 per day.

“This would be a pragmatic, fair, equitable and much-needed solution, that would be welcomed by SMEs and keep the wheels of commerce and industry going, subject to complying at all times with guidance from Public Health.”

The HR Dept is a UK-wide business which provides outsourced HR advice and support to more than 7,000 SMEs through a network of expert licensees.

In Altrincham, Peter Rzeskiewicz is managing director of Keyteq Live Events, which rents audio-visual equipment supported with technical expertise and project management. He said: “Furlough has been a lifeline for the main part of our business following the cancellation and postponement of large commercial contracts owing to the coronavirus crisis.

“However, for small businesses like ours, it doesn’t go far enough to cover the impact in other parts of the business where some activity needs to remain but on a significantly reduced basis such as finance and administrative work.

“As we can’t ‘part furlough’, to expect staff to do this work on reduced days to keep the business going but with a significant reduction in pay compared to furloughed staff not working who receive 80% of their pay, does not seem fair.”

Mark Doorbar is director of IT support and consultancy firm Life IT Ltd, in Wilmslow. He said: “What we urgently need is the ability to ‘part furlough’ employees where there are elements of jobs that still have to take place but on a reduced basis and where they can receive pay that is comparable to those who are on furlough and not working. Unless addressed this has the potential to cause serious resentment in the workplace.”

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