Winding-down the furlough scheme

Without a doubt, the furlough scheme has provided small businesses with the means to retain staff that would otherwise have been laid-off.
The government is paying 80% of furloughed employees’ wages (subject to a £2,500 maximum). From 1 August 2020, this level of support is expected to drop to say 60%.

From the same date, 1 August, the rules that effectively ban employees from working while they are furloughed is also expected to be eased and affected employees encouraged to return to part-time working.

However, employers will need to draw breath and figure out their choices regarding staffing levels as we start to emerge from lock-down.

The choices will be:

1. Retain staff and gradually wean the business from the Coronavirus Job Retention Scheme as sales activity resumes pre-March 2020 levels.
2. Lay-off part of the workforce, retaining those needed to support lower levels of activity.
3. Lay-off all the workforce as longer-term restrictions in trade make continued trading impossible.

Whichever of these three choices is considered planning needs to be a key part of the decision making process.

Many employers will need to consider these options as more of the economy is opened up and financial support for furloughed workers is decreased. Please contact us if you need help preparing the necessary forecasts so you can make an informed decision.

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