Redundancy 'cliff-edge' may be avoided when furlough ends, HR expert says

There are growing signs that an expected wave of job losses in October following the end of furlough payments may be less severe than many first predicted, according to a human resources expert.

Employees opting for reduced working hours are playing their part in helping avoid a redundancy cliff-edge when the UK government’s furlough funding draws to a close imminently, according to Jane Watson, head of Prism HR, the human resources consultancy operated by Scottish legal firm Lindsays.

The £66 billion Coronavirus Job Retention Scheme, which has latterly allowed businesses to claim 60 per cent of a furloughed employee’s pay, closes on Thursday September 30 – although there have been calls in Scotland, for example, to extend this.

There had been widespread fears that this could trigger a wave of redundancies from businesses that had held off making cuts while the support was in play. Ms Watson said almost one million jobs in Scotland have been furloughed since June 2020, and according to UK government statistics published earlier this month, there were about 116,500 people in Scotland on furlough at the end of July, the lowest level since the scheme started, and representing a 26,500 fall from June.

'Hopefully, fewer losses than were anticipated will be made,' according to Jane Watson, head of Prism HR at Lindsays. Picture: contributed.

Ms Watson said: “While we are coming to the end of the furlough scheme, it is not looking like the redundancy cliff-edge that many were imagining.

“Instead, we are starting to see signs that businesses, particularly [small and medium-sized enterprises], who relied heavily on the scheme looking to put staff on a reduced working week rather than making roles redundant. And that may be on a temporary or permanent basis.

“I am aware of some companies doing that and I am sure that shorter hours – some at the request of employees themselves – are helping to avoid redundancies.”

She added that some employers will unfortunately have to lay off staff, particularly in sectors that have been badly affected by the pandemic, such as hospitality. “But, hopefully, fewer losses than were anticipated will be made,” the HR expert also said.

She also cited recent figures from the Insolvency Service finding that only 143 employers in Scotland, England and Wales submitted HR1 forms – the advance documents required when redundancies of more than 20 people are being proposed – in August, half of the pre-pandemic monthly average.

Amenable

Ms Watson believes some people offered reduced working hours may be amenable to such an option because they fear being able to find another position in their area of work, while others are making requests because they have taken stock of personal circumstances during the pandemic, perhaps while on furlough.

She also said: “Reduced hours will not work in every situation, but for those where it’s possible it can be a win-win situation, whether on a temporary or permanent basis. For the employee, they may welcome working perhaps a day less each week to avoid the uncertainty of having to find new employment.

“For the employer, they can retain experience in their business, while avoiding the costs associated with redundancy, which can be significant for longer-serving staff. If they introduce reduced hours on a temporary basis, firms will also not face the significant time and cost of recruiting if they need greater capacity when work returns.”

A message from the Editor:

Thank you for reading this article. We're more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers.

If you haven't already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription.