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Businesses overwhelmingly support campaign for 'Part Furlough'

05 May 2020 9:00 AM | Lauren Martin-Grieveson (Administrator)

Businesses overwhelmingly support campaign for 'Part Furlough'

More than four fifths of firms back a motion to introduce a ‘part furlough’ element to the Government’s Job Retention Scheme, according the results of a survey released today.

Outsourced HR provider The HR Dept asked companies around the UK for feedback on the Government’s support package for businesses hit by the coronavirus crisis.

From 915 respondents, 82 per cent said they would like to see an option to part furlough their employees, so skeleton staff could carry out fundamental business activity such as payroll and invoicing and make the business ready for a return to more normal activity.

While the Government’s support package has been universally welcomed, businesses say the all-or-nothing nature of the furlough system prevents essential tasks being undertaken on a reduced hours basis. They also suggest potential for resentment among staff who are asked to work fewer hours for reduced pay, against those furloughed on 80 per cent of full pay and not working.

The survey also asked respondents whether they had employees who were ineligible for furloughing because they were not placed on PAYE schemes before the cut-off date of March 19th. Over a third (36 per cent), said that they did.

The HR Dept, whose network of licensees support more than 6,500 SMEs around the UK with outsourced HR, now plans to take the results of the survey to contacts in the Government and to share with influential bodies such as the Chartered Institute for Personnel and Development (CIPD).

Leading The HR Dept’s work on this matter is Sue Beeby, who owns The HR Dept in the Worthing and Adur area.

Sue said: “The survey puts concrete figures on what we suspected from discussions with our clients in the SME community. Namely that, while extremely welcome, the Government’s support package needs an appropriate intervention to reflect the genuine and widespread concerns of businesses at the smaller end of the spectrum.

“Many of the company owners I have spoken to since the scheme was introduced – and this is backed up by the results of our survey – say that, because the system does not allow employees to do any work at all, most businesses are without the reduced but important contributions needed to keep core business activities going. Nor are they able to prepare for a resumption of activities when the furlough period is ended.

“Those staff who may not get furloughed and are still working, often on reduced hours, with a limited number of statutory guarantee pay days making up the time when they are not required, then reverting to nil pay for non-working days. This is a major decrease in their earnings at a time when many colleagues are earning close to full wages despite not working at all.

“This poses serious problems for continuity, morale among employees and potential burn-out for company owners who are having to take on extra responsibility rather than asking employees to work in unfair pay situations.

“However, as often happens with constructive policy debate these concerns of smaller businesses are rarely aired and so we are doing all we can to represent their concerns.”

The HR Dept’s proposed solution 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 the same 80 per cent rate of daily pay, capped at circa £115 per day.  She believes this would give businesses the flexibility to see some work carried out and parity in compensatory pay for those not working normal contractual hours.

Sue said: “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.

“Otherwise, there is a danger of creating a disincentive to work and of negatively reinforcing wrong behaviours which are not in the best interests of the employer or the economy. The less flexibility there is, the greater the risk of fraudulent claims being made to HMRC on behalf of employees who are actually continuing to work part-time behind the scenes.”

The HR Dept’s position for flexibility has been supported by the CIPD’s head of public policy Ben Willmott, who was keynote speaker at the company’s annual conference for franchisees last year.

In a blog published on the CIPD website this week, Mr Willmott said: “The UK ‘all or nothing’ furlough approach may be simpler and easier to administrate than a more flexible scheme which enables short-time working but it also has significant drawbacks and disadvantages.

“Firstly, it does not allow organisations to continue to use staff on reduced hours where this is possible, meaning it is much harder for employers to flex their workforce efficiently, placing more pressure on remaining non-furloughed staff who often have to work harder or in unfamiliar roles to compensate.

“This is a particular challenge for micro and small firms under most financial pressure and with fewer staffing options.”

Article by Sue Beeby from HR Dept

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