It would be fair to say, most of us had not heard the term furloughing until recently, when COVID-19 prompted the closure of many businesses. This was done so that social distancing could take place in order to reduce the spread of the virus.
So, what is furloughing?
Sometimes also referred to as mothballing, furloughing is part of the Government’s Coronavirus Job Retention Scheme, aimed at protecting workers’ incomes while business-as-usual is disrupted. If an employer can no longer keep their business open or are unable to provide work, an employee can be furloughed and through the scheme, receive 80% of their regular wages, up to a monthly cap of £2,500, from the government.
This scheme was warmly welcomed by employers and employees alike when launched, as it meant employers weren’t having to worry about paying wages — often the largest outgoing expenditure for an SME — and they could retain their valued staff. For employees, it gave them guaranteed wages and a retained job in the long run.
However, the implementation of the scheme and furloughing as a process has been tricky and where it was intended to help, has caused problems for some. In general, these seem to arise when employees don’t neatly fit the eligibility criteria. Such situations include:
- they are too new in their current role (employees must have been on their employer’s PAYE payroll before or on 28 February 2020)
- they have multiple jobs (employees can be furloughed by one employer and continue to work for another or receive separate payments from each employer)
- they are on long-term sick (in which case they would receive Statutory Sick Pay for the period of sickness or self-isolation, but can be furloughed after this)
- they are on zero-hours contracts without a set salary.
How can employers furlough well?
With every new scheme, mistakes will be made but the majority are trying to navigate the guidance in the best way they can to ensure a good outcome for the business and their workforce. The furloughing of staff is set to continue in the current climate, so what can be done to ensure that it is done in the right way?
Firstly, the decision has to be jointly agreed by both the employer and employee. Once agreed, an employer must confirm in writing to an employee that they have been furloughed. The employer must also make the claim, not the employee.
As an employer, you may find this template letter from ACAS a useful resource when putting furlough agreements in writing. If you are an employee and are concerned that your employer has claimed on your behalf but is not paying you what you are entitled, you should raise this first your employer, then with the Advisory, Conciliation and Arbitration Service (ACAS).
Communication is also key to making this process work. Genuine, two-way, open and honest communication between employers and employees is essential and can avoid issues down the line. At the start of this crisis, many employers, especially some operating in the charity and not-for-profit sector, thought they would have to resort to making redundancies. In these circumstances where furloughing has been subsequently used, the staff have been pleasantly surprised at the outcome.
Finally, seek advice from trusted, quality sources. Many organisations and businesses, especially SMEs do not have HR departments on hand to help with processes like furloughing. Government advice is available nationally and local advice is readily available from local LEPs and Growth Hubs, as well as Local Authorities.
Furloughed staff can make a difference in their communities
On a positive note, furloughed staff may not work for their company while being on furlough, however they are permitted to undertake volunteering. During the coronavirus pandemic, it is more important than ever that we keep people safe and supported across our communities.
On our patch, North Yorkshire County Council and York City Council are encouraging employers and employees to consider if they can do their bit to support the most vulnerable people, either by volunteering or undertaking casual paid work that doesn’t impact on and is over and above their primary employment. NYCC is keen to engage these people and businesses and you can visit https://www.northyorks.gov.uk/careandsupport for more details.
On Facebook, the York & North Yorkshire Growth Hub have an Employment and Skills exchange group which seeks to connect people looking for new work opportunities with local needs. This may provide enriching and varied experiences for those people who have been furloughed.
For further help for your business during the Coronavirus outbreak, visit our dedicated Coronavirus support page.
Fourteen local businesses seem set for a great future. All fourteen have recently completed StriveLive, a two-month start-up incubator, with five businesses picking up awards and £2,500 in grant funding.
We are reaching out to you as valued businesses in York and North Yorkshire to publicise the consultation on the proposed York and North Yorkshire devolution deal.
29th November 2022FREE
With multiple dates in York and Harrogate, these fully funded workshops will help businesses involved in the tourism sector to plan for 2023, with Martin Evans of The Tourism Business. Benefit from dedicated group coaching with this fully funded tourism business booster for hospitality businesses in York & Harrogate.
29th November 20222:00 pm - 4:00 pmFREE
In this session, Ian Walker of Ian Walker & Co. Chartered Accountants will consider why having a tight grasp on your numbers and trading performance is important. Not only historic results but also on projection and budgets. He will detail how to compile such figures and how to interpret them, and also touch upon how good financials (numbers) leads to better decision making.
30th November 2022FREE
The Growth Hub is proud to be amongst the organisers of this year's expanded York Business Festival, with a week of events as part of a wider programme of activity throughout November. Read on to learn what will be available through the Growth Hub and other organisations.
We have recently hosted a programme of in-person seminars and other events, some of which were professionally recorded and can now be viewed on our website.
This workshop will provide guidance on cost based pricing, calculating your costs before deciding an appropriate margin, as well as covering market based pricing asking questions such as: What value do you add? What are you worth? How do you position yourself?
Getting into the right habits early on in your business journey will make life easier as the business grows and you find yourself under more time pressure. This workshop with business coach Gareth Allen will pose some useful questions to ask yourself, and give you some ideas to get the basics right.