Professional Firms Insight: using the furlough scheme to re-employ redundant staff – what you should consider

Throughout October, on the basis that the existing Coronavirus Job Retention Scheme (CJRS) (also referred to as the furlough scheme) would end on 31 October 2020, many firms took the difficult decision to make redundancies. On 5 November 2020 the Chancellor announced that scheme would be extended until 31 March 2021, and the terms of the scheme made it possible to re-employ people who had previously been made redundant, and place them on furlough instead. Since then many businesses have debated whether they should take this approach. While the answer may seem to be a straightforward ‘yes’ in order to provide former employees with a potential income until March 2021, there are many factors to consider before going down this road:

• Why did you make this person, or group of people, redundant?
• When the furlough scheme ends in March 2021, does that person’s skill set align with your post-Coronavirus strategy for the business?
• Will there be a sustainable job waiting for them?
• Will the individual have to repay any redundancy pay they received?
• What will the impact be on your remaining workforce?

Having just been through one consultation process, you are now on the hard path of rebuilding staff confidence. While they may be pleased to see their colleagues back in the short-term, the prospect of fresh redundancies in the New Year could affect morale. It’s likely that your remaining employees are busier than ever. It’s important to consider the impact on their motivation if their newly-returned colleagues are furloughed on 80% pay. They may feel that they are left picking up the slack.

Although saying ‘yes’ may be the easier decision to make in the short-term, this is an opportunity to reshape your plans for the future, and to assess the opportunities which are available to you. Will this decision ensure that your business is in a strong position going into 2021? Will it help your business not only to survive this pandemic, but to thrive?

Depending on your circumstances, there may be other solutions to using CJRS to retain jobs until March 2021, without causing further redundancy issues. Our experts are available to discuss the potential impacts of this decision for you, and to help shape your people and business strategy in this ever-changing environment. Please get in touch to find out more about how we can help.

Whatever you decide, it should be noted that unlike the previous furlough scheme, HMRC have said they will publish the names of employers who have made claims under the scheme for the month of December onwards.