As the economy begins to reopen and the Coronavirus Job Retention Scheme (CJRS) comes to an end, business leaders are planning and rethinking the future of their workforce.
In our latest monthly survey of 500 UK medium-sized business leaders, we found that 89% of those surveyed have already made up to a fifth of staff redundant, with more job losses expected in the coming months. Less than 10% have no plans for any job cuts at all.
Mid-sized businesses are vital to the UK economy, generating a massive £1.4trillion in revenues and almost 8 million jobs. When the pandemic first hit, businesses had to improve cash flow, liquidity and minimise liabilities, and unfortunately, redundancies ensued and continue to remain likely. Millions of these jobs were placed ‘on furlough’ via the CJRS. It is clear that employers are already making tough staffing decisions as they face muted demand and swelling operational and import costs as we approach the end of the year.
The future of the furlough scheme
As the CJRS winds down, queries remain as to whether the Chancellor will see fit to extend it within certain sectors. Certainly, BDO partner Make UK, the industry body representing 20,000 companies of all sizes in engineering, manufacturing, technology and the wider industrial sector, has called for the scheme to be extended for the most-affected sectors of the economy in order to prevent a loss of skills which would set the UK at a disadvantage internationally.
The Government’s Job Retention Bonus Scheme has also been called into question. Employers will be paid a bonus of £1,000 for every employee who has been furloughed at some point but who returns to work and remains continuously employed from 1 November 2020 to the end of January 2021. Payments will be made from February 2021. The question has been raised as to whether this is enough of an incentive for businesses to retain employees into the new year and whether the Government should do more to stave off an influx of redundancies just before Christmas.
Another risk that businesses currently face is the crackdown from HMRC on fraudulent use of the CJRS. ‘Furlough fraud’ has been reported to be rife, with up to £3.5bn of claims being fraudulent or error-based. Employers were given 90 days to disclose incorrect furlough claims, up until 20 October 2020, giving businesses a vital, but ever shortening, window to right any wrongs, or repay any incorrect claims.
Once the 90 day period passes, the gloves will be off. HMRC will begin in earnest to pursue furlough claims using both criminal and civil powers – I understand that it already has a list of 27,000 claims to investigate. Those who knowingly made incorrect claims and failed to notify the HMRC will face significant penalties.
We have a range of tools to aid with calculations, check they are correct and to aid with a risk review of your CJRS claims. Get in touch with our team today to increase your peace of mind.
Adapting for a more resilient future
It has been evident in certain sectors that hiring has increased. The latest Report on Jobs survey from the Recruitment and Employment Confederation shows hiring increased last month for the first time since March. Job placings for temporary workers grew at the quickest rate in 20 months while permanent placings rose only "marginally". For those taking on contractors to stay flexible, the impending Off-payroll Labour (IR35) change that comes into force from April 2021 will be another risk to manage. HMRC are cracking down on employees paid off-payroll, usually via a Personal Service Company (PSC). Our full IR35 guidance helps to clarify the changes.
We tell our clients to not dwell on the past; instead, monitor business performance more frequently and work with suppliers to enhance resilience and efficiencies. For example, now is the time to plan how they can upskill their employees or differentiate their offering in the market. During this period, many medium-sized businesses invested in new technology and more than a quarter are launching new products or services because of the pandemic.
COVID-19 has not exacerbated a skills shortage amongst UK businesses; 32% admit that even prior to the pandemic their workforce did not have the skillset to drive their business forward. In order to help overcome this situation, 42% have expressed the desire to build stronger links with educational providers and 39% of UK businesses plan to invest in internal training and development.
Skill growth and development will be a strong factor in building the resilience of businesses’ existing workforce. Flexibility and innovation will be key to retaining a resilient workforce after the government support ends, whilst maintaining a strong risk review process to avoid being caught out by HMRC as employment issues become more complex than ever.
You may also be interested in:
Coronavirus Job Retention Scheme: Everything you need to know