Navigating the end of furlough: what employers need to know

With the job retention scheme coming to an end, businesses need to be prepared to reintegrate the million employees who are still on furlough

The Coronavirus Job Retention Scheme (CJRS) was announced in March 2020 and, since being introduced, has helped to protect millions of jobs, with 8.9 million furloughed during its peak in May 2020.

A total of 1.3 million employers had made use of the furlough scheme, as of June 2021, but despite an estimated million people still benefiting from the scheme, the government will be bringing it to an end from 30 September.

With this date fast approaching, many employers will have already decided whether they can now afford the 80% of furloughed workers wages which have gone unpaid (20%) or paid for by the government (60%). For many currently on furlough, this may unfortunately end in redundancy, but there will also be many workers welcomed back into the fold.

Preparing workers for the return from furlough

For those that have been on furlough since the scheme was first introduced, it is possible that they will have been out of full-time employment for well over a year. Emma Parry, professor of HR management at Cranfield School of Management, says: “Some employers are presuming that furloughed employees can just pick up where they left off and that’s not the case.

“Employees that have been off work for a while will take some time to readjust and might be anxious or worried about the idea of coming back to work. So it is essential that employers think about how they prepare staff for this.”

Employers also need to see this as an opportunity to reassess how they think about their workforce and keep their people engaged

A lot may have changed within the organisation over this period, so bringing people back up to speed will be important. Considerations could include introducing a phased return or providing additional training.

Rebuilding relationships will also be a key consideration, according to Parry. She says: “It’s important not to forget people that haven’t been furloughed during this time. In some cases there is a misconception that furlough has been like an extended holiday, so you may need to deal with tensions between furloughed staff and those that have worked through the pandemic.”

Possible solutions could include offering wellbeing days or extra time off for those that have worked throughout the past year and encouraging conversations to help address the “us and them” mentality.

On the other side of the equation, some furloughed staff may feel less valued than those that were retained. “Communication is important,” Parry says. “Make sure the line manager and employee have an open discussion about changes in the organisation and how their role now fits in. But also ask the employee what they want to achieve in their career and find a way forward that works for both.” 

She adds: ”Employers also need to see this as an opportunity to reassess how they think about their workforce and keep their people engaged.”

Avoiding redundancies

While the aim of the CJRS was to keep people in employment, redundancies may have to be considered at businesses that have not recovered financially from the pandemic. But this is not the only option available to employers. 

Bindmans employment lawyer Tina Din warns: “Redundancy is a costly exercise, from a financial, emotional and time perspective. All options should be considered when looking to avoid them.” This could involve seeing if employees would be happy reducing their hours, taking a pay cut or taking extended leave, she advises. “With the furlough scheme coming to an end it is now easier to make those adjustments to contracts, if the employee agrees.” 

During the 2008 recession many organisations moved staff onto part-time contracts or introduced pay freezes to help avoid redundancies. Parry adds: “The advantage of this is that, when things pick up again, you’ve got an engaged workforce there already that you can quickly bring back on board.”

Another consideration is the potential to free up capital by ending expensive office leases. “If home working is feasible, it could save enough to help you avoid making a redundancy,” Din says.

If your company has to let people go, it is important to be aware of your obligations as an employer. She adds: “This might involve individual consultations or collective consultations for groups of 20 or more employees. You will need to ascertain whether anyone wants to take voluntary redundancy and be mindful of discrimination implications.”

It is also important to note that, as of December 2020, payments for statutory and contractual notice periods are no longer covered by the CJRS.

Potential fallout

Although much of the economy has now reopened since the majority of coronavirus restrictions were lifted on 19 July, there are still industries which are feeling the impacts of Covid.

The aviation sector continues to be badly affected, with Heathrow recording a fall in passenger numbers of 80.5%. As a result, airlines remain one of the largest benefactors of the furlough scheme. 

British Airways issued an internal memo to staff last month which warned that when furlough ends, “our pay costs will steeply increase, and any increase in costs is bad news”. 

There are currently no new government support measurements planned and, although the furlough scheme was previously extended, it is unlikely this will happen again. 

Some have suggested that the end of furlough could help to address the current labour shortages in the UK, which have seen the number of job vacancies hit a record high of 1.03 million. However the CBI’s director general Tony Danker warned that “furlough ending is not the panacea some people think will magically fill labour supply gaps”. 

Parry explains: “It’s a very simplistic view of the problem and the labour market doesn’t work like that in reality. On one level, people may not have the skills, motivation or the willingness to fill the jobs that are vacant.  But equally, not all of the labour shortages are a result of furlough; there is a melting pot of factors that are currently contributing to it.” 

Employers will therefore have to consider carefully how they navigate the ending of the furlough scheme to ensure their actions are in the best interests of their employees and the organisation.