From October – many employers will struggle to pay their staff. Are redundancies inevitable?

Carrie-Ann Randall, Employment Lawyer at Lawson West Solicitors, Market Harborough
crandall@lawson-west.co.uk 

Employers will struggle to pay wages

Many employers are struggling to make ends meet now, but at the end of October the government will withdraw the Coronavirus Job Retention scheme (CJRS) cancelling flexible furlough contributions towards employee pay. When this happens, many employers will face a huge shortfall in their ability to pay wages.

Plan ahead for the autumn

Employers should start to plan now for the impact this will have.

Employers can use the furlough scheme until the end of October to receive government contributions towards employee pay, view our at-a-glance chart below.

• From 1 September the government’s contribution incrementally reduces to 70% of wages.

• From 1 October the government’s contribution incrementally reduces to 60% of wages

• From 31 October the CJRS will cease.

Carrie-Ann adds:

“Employers need to start to plan ahead and consider what steps they need to make to their workforce to continue to be able to afford to pay employees from the end of October, when the flexible furlough scheme (CJRS) ends.

Workforce planning options might include:

• discussing a reduction in hours or overtime

• discussing a reduction in pay for a set period of time

• extending holiday entitlement in exchange for less pay

• reducing days worked

• introducing a sabbatical or unpaid leave of absence; or

• implementing redundancy options, voluntary or compulsory

At Lawson West Solicitors, we can help you to manage and plan for all these options in the right way, avoiding legal problems and unfair dismissal claims that could arise in the future.”

3 most common employer redundancy mistakes

If you are in the process of making redundancies or considering them, you might like to know the 3 redundancy mistakes employers often make, see more here.

• • • What steps will you take in your business this autumn?

Please find recent information available from the Government about the Coronavirus Job Retention Scheme (CJRS), furloughing employees and calculating wages and contributions here and click on the summary charge below to view key deadlines.

Claiming for staff wages  – the Government’s step-by-step guide to CJRS

Redundancy or Flexible Furlough? That is the Question – see Carrie-Ann’s related article