Companies in Durham and Tees Valley will need to show even more flexibility once the replacement for the furlough scheme is introduced in November, according to Nicky Jolley, managing director of HR2Day in Darlington.
On October 22, the government announced changes to the previously announced extension to the job retention scheme to support UK employers. From November 1, eligible employers using the new scheme will be able to put workers on reduced hours but will be required to contribute 5% of their lost pay, with the government topping the rest of the wage up. Anyone working more than one day a week will be eligible for the scheme, which will run for the next six months.
Although this is more generous than the scheme originally proposed, the changes will still put the squeeze on people working at firms as part of a team, or in a department, where demand is down. Now, the ongoing total costs of retaining each member of a staff team on reduced hour arrangements will exceed the cost of retaining less staff working full time, leading to some tough decisions for hard-pressed firms.
HR2Day managing director Nicky Jolley said: “The changes announced on the 22 October to the proposed scheme are welcome, but firms will still need to think very carefully about whether to take up the offer of support and retain all their staff. Their margins have already been bitten to the bone and they need to get the most out of every pound they spend. They should only be doing this if they are sure that they will definitely need each individual role within their structure, and the same number of people doing it, in the long term.
“The language from government is changing, and firms need to shift their approach accordingly, with the emphasis moving towards support for jobs that can be deemed ‘viable’ in the long term. From February, the government expects that all businesses in the scheme will be increasing their employee hours worked, which is a clever way of helping people back to their workplace.
“But many firms can’t afford to ignore the financial implications of keeping people in jobs that they wouldn’t include if they were starting from scratch today. For our clients that are accessing the scheme, we are advising them to continue reviewing their financial and operating position regularly, perhaps even daily.”
Although the national jobs picture remains pessimistic, the local picture might be quite different, according to Nicky Jolley. “Many of our clients are back trading at pre-pandemic levels, have recalled all their staff and have a full order book for the winter. It all depends on the sector, and how able they are to trade during this difficult time. Nobody that loses their job because of the covid-19 pandemic and its economic impacts should blame themselves.
“For most of us, there’s never a particularly good time to be out of work and looking for a new job, but there are opportunities for anyone prepared to be flexible, especially given the support that the government is providing to help people change careers and retrain. Don’t give up hope, but please be prepared to try something new.”