With 2020 nearing its close, in this article we reflect on the challenge’s businesses have faced in 2020 and consider what we can do to plan for the year ahead. We know that we will start 2021 still working in a Covid-19 secure way, but we will also see the UK move out of the Brexit transition period and therefore start seeing the changes that Brexit will bring to the UK.
It is fair to say that 2020 has been the most challenging year, for business and employees. We have seen uncertainty and turmoil in dealing with a pandemic.
According the Office for National Statistics, unemployment has risen to 4.8% for the period July to September. This is 0.9% higher than a year ago and 0.7% higher than the previous quarter April to June. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/november2020
Redundancies have increased by 181,000 for the period July to September, which is a record high and we have seen an increase in the number of businesses going into insolvency. According to the Government’s Insolvency Service, England and Wales had 856 insolvencies in October. This is a significant number; however, it could have been significantly greater, since it is a decline compared to the same period in 2019. This might seem strange, but it is believed that this reduction in company insolvencies is likely, in part, because of the financial support packages that the Government introduced to support businesses in responding to Covid-19.
We have also had to deal with the news that was confirmed in August that the UK’s economy shrank by 20.4% between April and June compared to January to March, meaning the UK is officially in a recession.
2021 Progressing Forward
For these reasons, businesses will need to re-build to not just remain in operation, but to become stronger and be able to continue to respond to the pandemic. A crucial part of doing so, will be to plan for the year ahead.
We know that 2021 will begin still working in a Covid-19 secure way, and we will also see the end of the Brexit transition period which will bring changes for the UK from 1 January. Planning is going to be vital to success. But there is light at the end of the tunnel with the welcomed news of a vaccine that is going to be rolled out from early December over the coming months.
We have seen the Government provide financial support to businesses since March 2020 and this will continue into 2021. It is important to consider how you can best utilise funding available to help your business continue operating. Here is a summary of the various options, for which you can read the full detail in the Governments guidance page. https://www.gov.uk/government/collections/financial-support-for-businesses-during-coronavirus-covid-19
Coronavirus Job Retention Scheme (CJRS)
The CJRS was in place until the end of March 2021 and has very recently (on December 17th 2020) been extended again until April 2021. At present, the Government are paying 80% of normal wages (capped at £2,500 per month) with employers paying only the cost of national insurance and pension contributions. We are expecting the Government to review the scheme in January, at which point, they may announce that employers are to contribute towards the scheme, as was previously the case back in September/October. However, this will depend on the economic circumstances of the UK.
Statutory Sick Pay
Whilst there is a vaccine, and many others continue to be in development stage, we must accept that we will still be living with Covid-19 for many more months to come. It is important to be prepared for continued covid-19 related absence and self-isolation requirements.
If an employee cannot work because of Covid-19 they may be entitled to SSP if; they or somebody they live with has coronavirus symptoms or tested positive, they have been told to self-isolate by Test and Trace, somebody in their support bubble has tested positive or they have been advised by a Doctor or healthcare professional to do so before going into hospital for surgery or a procedure.
They may also be eligible for SSP if they live or work in an area with restrictions in place including advice to shield and they have been advised to shield because they are at very high risk of severe illness from Coronavirus.
Adult Social Care Infection Control Fund
This fund is specific to those businesses operating in adult social care by helping to reduce the need for staff movements between sites. It is available to both those operating in residential settings as well as community care settings and can include those who do not have a contract with local authority.
The Government expects the grant to be fully spent on infection control measures, for which they have defined and will be in place until 31 March 2021. One example of how the grant could be used is to ensure that staff who are isolating in line with government advice receive their normal wages and do not lose income whilst doing so. For instance, the grant could be used to uplift the pay of staff who are self-isolating and who ordinarily would have only received SSP. You can read more about this scheme in the Government’s “Adult Social Care Infection Control Fund – round 2 guidance. https://www.gov.uk/government/publications/adult-social-care-infection-control-fund-round-2/adult-social-care-infection-control-fund-round-2-guidance
Business Loans, Grants and Financial Relief
Coronavirus Bounce Back Loan
Th Coronavirus Bounce Back Loan is for small and medium sized businesses to enable them to borrow funds quickly, with the maximum amount being £50,000. Fees and interest will not need to be repaid for the first 12 months, but when interest is paid, it is set at 2.5%. This scheme is open for applications until 31 January 2021.
Coronavirus Business Interruption Loan Scheme
This scheme helps small and medium sized businesses to access loans for either up to 3 or 6 years (depending on the type of finance applied for). This scheme is open for applications until 31 January 2021.
Coronavirus Future Fund
This scheme is to make available government convertible loans between £125,000 and £5 million to innovative companies and are subject to at least equal match funding from private investors. It may be an option for those businesses relying on equity investment and who are unable to access other government business support programmes because they are either pre revenue or pre profit. This scheme is open to applications until 31 January 2021.
Business Rates Relief
For retail, hospitality, leisure, and nurseries (those Ofsted childcare settings providing childcare for children up to the age of 5) in England do not have to pay business rates for the 2020 to 2021 tax tear. The local council will automatically apply the discount so there is no action needed to be taken by the employer.
Local Restriction Support Grant – Closed (for nightclub, dance hall or adult entertainment businesses)
Businesses in England, operating as nightclubs, dance halls or as adult entertainment and who have been required to close due to national restrictions since March 2020, and remain closed may be eligible for the Local Restrictions Support Grant (LSRG). It is a cash grant for each 14-day period they are forced to close and is available from 1 November 2021.
Local Restrictions Support Grant – Open (for businesses operating in Tier 2 or Tier 3)
Businesses in England, operating in Tiers 2 or 3 and who have been severely impacted due to the tier restrictions, may be eligible for the Local Restrictions Support Grant (LSRG). It is cash grant for each 14-day period and it is for the local council to determine the eligibility criteria for the grants, but the expectation set by the Government, is that the grants target hospitality, hotel, bed & breakfast and leisure businesses.
Local Restrictions Support Grant – Closed (for businesses operating in Tier 2 or Tier 3)
Businesses in England, operating in Tiers 2 or 3 and that are required to close due to Covid-19 on or after 9 September, may be eligible for the Local Restrictions Support Grant (LSRG). It is a cash grant for each 14-day period businesses are closed. An eligibility criterion exists.
Additional Restrictions Grant
The Additional Restrictions Grant (ARG) supports closed businesses that do not directly pay business rates as well as those that do not have to close but are impacted by Covid-19. Each local council determines which businesses to target and determines the amount of funding awarded. It focuses on those sectors significantly impacted such as retail, hospitality, leisure, and other businesses in the events sector.
VAT deferral new payment scheme
A new VAT payment scheme will come into operation from early 2021 allowing employers to pay VAT payments that were deferred in the period 20 March 2020 and 30 June 2020.
It will enable businesses to pay small monthly instalments over a period of up to 11 months, interest free. All outstanding amounts will be due by 31 March 2022. Alternatively, a business can pay the amount in full by the 31 March 2021.
Resource Options for 2021
Planning your structure and your resource needed for 2021 is going to be vital. Now is the time, if you have not already done so, to look at whether your business is structured appropriately to face the continued challenges ahead.
It is also hoped at this time that staff attrition is avoided or kept to a minimum, especially for those businesses who rely heavily on the recruitment of EU nationals, such as the care sector and hospitality since the rules on recruiting are changing.
Here are ideas on how you can ensure you have the right resource in the right place to help your business succeed in 2021:
Restructuring and Redundancy
The priority will be to assess whether your business is structured correctly to respond to the pandemic and focusing on rebuilding.
Unfortunately, the restructuring of how businesses operate because of the pandemic will be vital for many, and consequently, the real threat of redundancy. We know that redundancies have increased by 181,000 for the period July to September, and we have also seen an increase in the number of businesses going into insolvency.
If it is evident that that the business needs to change how it operates, whether this is for financial reasons, or to be able to adapt to changing customer requirements, then developing a good solid business case will be vital when beginning a change programme.
Having a solid business case can not only help you manage a fair process, but it can also have a significant impact on how employees react to the news. If they can understand and appreciate the reasons for the proposed change, they are more likely to support the business. Additionally, in the absence of a good business case, employees may not be convinced of the genuine reasons for redundancies being considered and are much likely to challenge the process at all stages which could see Employment Tribunal claims being made.
Entering a change programme is always very difficult, but if it protects the business longer term, it may unfortunately be necessary for the survival of the company and to protect as many jobs as possible.
Apprenticeships and the Kickstart Scheme
Having assessed your structure, and taken any necessary action, consideration could be given to whether using apprenticeships or placements under the Kickstart Scheme would add value and bring benefits to your business including:
- Is a simple and cost-effective recruitment process
- An apprentice has tailored on-the-job training to suit the organisation’s requirements
- Securing future business planning by investing in the future workforce
- Providing an opportunity to partner with local community and training providers.
The Government’s “plan for jobs 2020” which was launched in the summer, aims to help young people and unemployment levels. It recognises that young people are the most vulnerable coming out of the pandemic because of their lack of work experience as well as the long-term impact that unemployment will have on individuals and their families.
The Kickstart Scheme focusses on helping young people find employment which at the same time funds the direct creation of high-quality jobs for young people. It was announced on 12 November that over 19,000 job placements had been created for young people under the scheme.
There was also the announcement that the Government is boosting financial support for apprenticeships by paying businesses more to hire apprentices, on top of the existing financial support that is in place. They will give employers £2,000 for each new apprentice they hire under the age of 25 and £1,500 to employers for each new apprentice they hire who are aged 25 and over.
As part of resource planning and looking at the organisation structure in determining if it remains fit for purpose, consider how you can bring more flexible working to the working environment.
Even though a statutory right to ask for flexible working has been around for many years, supporting flexible working now to help your business can be beneficial. For example:
- Better utilisation of workers – the arrangements are not always just one-sided as flexibility can work both ways, with work being done to meet the demands of the job and time off being taken in quiet periods
- Enhanced job satisfaction – 40% of SMEs believe the main benefit of flexible working schemes is increased employee satisfaction
- Increased productivity – statistics prove that a happy workforce is more productive
- A less stressed workforce – workers who can accommodate either family commitments or other outside activities feel less stress as they are not so torn between conflicting demands.
- Reduced turnover – people can fit the demands of home life within their working lives and are noticeably more committed to staying with an employer who facilitates this
- Wider recruitment pool – flexible working is an overwhelming attraction proving even more of a pull than money. In addition, flexible schemes can attract a wider range of candidates who otherwise would be barred from applying because of their other commitments.
- Better timekeeping – if people can fit their working time around outside commitments (e.g. the school run, rush hour traffic) their ability to arrive on time may be enhanced and you will benefit from their presence, rather than having to manage their absences/lateness
- Lower costs for the employer – in some organisations, the introduction of some form of flexitime system has decreased costs. Time previously spent attending appointments, taking long lunch hours etc is now taken in the employee’s own time and is no longer working time. In addition, a ‘bank’ of worked hours can reduce overtime payments: overtime is worked to meet the demands of the job but may not be automatically paid until, for example, the end of each quarter and it may be that some employees prefer to take the time in lieu.
So, whether you welcome current employees to make flexible working requests or hire new people on flexible arrangements, you could consider any number of different flexible ways of working to have a flexible workforce that has the ability to help your business recover.
- Part time working
- Condensed hours (5 days worked across 4 days)
- Term time
- Job share
- Working from home (either 100% or for part of the week).
Apart from the other common types of flexible working, a novel approach could be to introduce a 4-day working week.
We saw in the summer talk about whether a four-day working week would help the UK in its recovery from the pandemic, with several cross-party MPs writing to the chancellor asking that the government consider it. A four-day work week, as the name suggests, is where full-time employees have three days off in a week.
The concept is radical and perhaps unlikely, but there is nothing to prevent companies considering doing this to further protect their business, save costs and avoid redundancies. One key benefit of a four-day working week for an organisation is that it can help to stimulate their business.
A move to a four-day work week will be a fundamental change to how the business operates and the practical implementation is likely to be challenging, especially to small businesses who may not have a dedicated HR function to help navigate through manging the change.
Reducing a business’ operating hours will be a fundamental change to the employment contract. For some organisations, there will be flexibility clauses currently within their contracts of employment allowing them to propose and consult on the idea. However, for those businesses whose contracts of employment do not allow changes being made, will require a more delicate approach to seek mutual consent. The legal ramifications could be significant and costly should the process undertaken not be handled carefully or by following a fair and thorough procedure. However, nonetheless, it is a serious option for consideration.
Ensure you use the best type of contract for new recruits
One way in which an organisation can be in a better position to respond to ongoing Covid-19 challenges, is by considering what type of contract of employment is best when hiring in 2021. Consider how you are best protecting your business as well as potential future costs. There are many types of contracts of employment that can be utilised.
If you are unsure what business levels are going to be like moving forward, then rather than committing to an appointment on an open-ended contract (i.e., your traditional permanent contract), consider only committing to an appointment for a fixed duration. During which time, you can assess how business is progressing and whether there is scope to make the appointment longer term by then offering an open-ended contract later in 2021.
Alternatively, could you consider buying in services as opposed to directly employing the specific skill and expertise, ensuring you keep costs to a minimum? For instance, buying in the services of payroll, training, HR, IT are all areas of expertise that can be bought in.
The Impact of Brexit on Your Existing Workforce
The transition period for the UK leaving the EU ends on 31 December 2020, which will have an impact on UK based companies who currently employ EU, EEA, and Swiss nationals.
As part of the UK leaving the EU, if your EU, EEA, and Swiss nationals wish to continue working in the UK next year, then they must apply to the EU Settlement Scheme to receive pre settled or settled status. The employee must already be in the UK by the 31 December 2020 but have until 30 June 2021 in which to apply.
It will be the employee’s own decision and responsibility on whether to apply and cannot be required by the employer. It would be reasonable however for the employer to understand their employees’, position in terms of whether they are going to be applying as this will be essential for any resource and budget planning next year.
For current employees who have indefinite leave to enter or remain, they can continue to live in the UK without applying to the EU Settlement Scheme. However, if they spend more than 2 years in a row outside the UK then they lose their settled status. They can avoid this by applying to the EU Settlement Scheme and if granted, they will get settled status meaning that they can spend up to 5 years in a row outside the UK without losing their settled status.
If an employee has lived in the UK before 1973, they will have been given indefinite leave to remain status. In which case, they do not need to apply for the EU Settlement status.
You can undertake our Brexit Audit, to assess whether your organisation is prepared for changes that will be brought about because of the transition period ending 31 December 2021. https://www.hrsolutions-uk.com/brexit-risk-survey/
Impact of Brexit on your 2021 resource requirements
From 1 January 2021, EU nationals wishing to live and work in the UK for the first time, will be required to apply to work in the UK through a new points-based immigration system. The existing visa schemes for recruiting non-EU nationals will be consolidated into the new points-based system, which will enable EU and non-EU nationals to be treated equally in respect of coming to work in the UK.
To recruit under the system, an organisation must hold a sponsor licence, and there will be fees attached to recruiting from outside of the UK.
To transition to the points-based immigration system, there will be a 6-month period in which employers will be able to continue to accept passports and national identity cards as part of their usual right to work checks. This will be in place until 30 June 2021, after which, EU nationals who do not have settled or pre settled status, will require a visa to work in the UK, in the same way as non-EU nationals.
2021 Action Plan
We would recommend the following key actions to help you get ready for 2021.
Review your organisation structure – is it still fit for purpose? Consider:
- Are you set up to meet the needs of the business?
- Do you have sufficient flexibility within your workforce to be able to respond to the pandemic?
- Do you have the right skills, in the right place?
- Do you anticipate needing to recruit from outside of the UK.
Depending on this review:
- Develop a People Plan on how you can be successful in 2021 through your people (this will be regardless of the outcome of your review)
- Do you need to implement a change management programme and therefore look to carry out a restructure and possible redundancies?
- If you are expecting to recruit from outside of the UK apply to get a sponsor licence sooner rather than later. We expect a significant demand will be put on the home office in the coming weeks as businesses start preparing for Brexit. This will be compounded by the impact of the current Covid-19 situation.
- If you do expect to recruit from outside the UK, talk to recruitment teams about wider range of jobs which can be sponsored
- Budget for increased visa costs if you expect to be recruiting from outside the UK
- Monitor your EU employees’ position on whether they are applying for the EU settlement
- Plan for British employees who will need to travel to the EU next year and establish if a visa will be require
- Consider what type of contract is most appropriate when recruiting next year
- Can you consider adopting a more flexible workforce?
- Do you need to upskill your workforce?
Further HR Guidance
- Webinar Recording: you can watch the HR Solutions webinar called ‘2021 Planning for the Year Ahead’ on demand at www.hrsolutions-uk.com/services/2021-planning-for-year-ahead.
- HR, Health & Safety Advice: HR Solutions are here to provide you with support and advice on any employment, health and safety related issues; to find out more call us on 0844 324 5840 or contact us online.