The Coronavirus Job Retention Scheme: Considerations for Company Leadership

The rapid influx of COVID-19 is having a global impact, the likes of which we have not seen in our lifetime. There are of course primary concerns surrounding the impact on people’s health, capacities in our hospitals and care centres, and supplies and safety for our health care workers. But the dire economic effects of this pandemic, effects we are seeing reflected in the stock market and across so many businesses and industries are exceptionally challenging to address with certitude.

We have seen drastic moves in how businesses are operating. The UK is experiencing a near full lockdown, with all possible non-essential personnel working remotely. News is spreading of businesses such as Greggs, McDonalds, and Costa Coffee closing. Many companies have begun the process of layoffs or furloughs.

I have spent many years working with executives and business leaders often providing advice relating to workforce changes. But this time, it’s different. The sheer scale is different. Business leaders are grappling with the difficult, and heart wrenching decision of how to navigate this crisis in a way that allows them to come out on the other side - especially difficult given the uncertainty of the timeline.

Recently, the UK Chancellor announced a package of temporary, targeted measures to support public services, people and businesses due to the disruption caused by COVID-19. This comes by way of the Coronavirus Job Retention Scheme, under which all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. These employees will be on "furlough".

The key features of the Scheme are as follows:

• Any UK employer, big or small, private or charitable can access the scheme.
• The employer will designate affected employees as ‘furloughed workers,’ and notify their employees of this change.
• Employers will need to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required).
• HMRC will reimburse 80 percent of furloughed workers wage costs, up to a cap of ï¿¡2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
• The Government hopes to have processed the grants by the end of April but if a business needs short term cash flow support, it may be eligible for a Coronavirus Business Interruption Loan, as set out in the Guidance.
• Employers can top up salaries further if they choose to (eg funding the difference between the 80 percent payment and the employee’s full salary), but they don’t have to do so.
• Employees will remain employed while furloughed. However, to qualify for the scheme they must not undertake any work for the employer while furloughed.
• The Scheme will cover the cost of wages backdated to 1 March. It will be open for three months from that date (until the end of May), though the Chancellor may extend the scheme for longer if necessary.

From my perspective, there are a couple of other key considerations - how do employers decide who to furlough and who to keep on? How do employers manage potential unfairness between workers who are paid to work, and those who are paid to not? Ultimately, there are two key considerations here:

1. Which business function(s) is deemed essential and cannot manage the hit of stopping work?
2. Are there individuals in your company who are considered vulnerable, and for whom it is best if they do not work, maybe even remote?

Making the decision based on the above will keep things clean and eliminate many of the questions surrounding the furlough. 

Another option for leaders to consider is bringing in an HR specialist who can help them navigate this scheme on an advisory or interim level. While it may feel impossible to bring on someone new in order to figure out who to possibly let go, bringing on someone in this capacity can help leaders better understand the business decisions, and can also help to alleviate the emotional weight as they act from an independent standpoint. 

Being in a position of leadership - especially right now - is challenging. These are difficult times and there are difficult questions to answer. Decisions are changing rapidly, and for many businesses it is tough to keep up.

How has your company been handling the impact of COVID-19? Are you considering furloughing some of the team or perhaps bringing in an HR specialist? Please reach out if we can help in any way.