Half of UK employers expect redundancies after furlough scheme ends

Furlough

Almost half of the employers that have put staff on furlough expect to make redundancies when the government’s Job Retention Scheme ends, according to a recent poll. Research by People Management has found that most employers using the scheme have done so for workers they would have otherwise had to let go.

The survey of over 500 HR professionals reveals that despite already making redundancies at the start of the crisis, 42% anticipate that they will have to make redundancies when the furlough scheme ends. Furthermore, 8% of respondents said they expect the number of redundancies they will have to make to be considerable.

Lifeline for jobs

The jobs retention scheme was first introduced in March to mitigate the impact of the coronavirus outbreak. The scheme covers 80% of a furloughed employee’s wages, up to £2,500 a month. Since the start of the Coronavirus crisis, it’s estimated that 8 million people have been put on furlough. This has allowed thousands of businesses across the UK to retain their workforce while the government pays up to 80% of a worker’s wages, up to £2,500 a month.

However, while the furlough scheme has been a lifeline for protecting millions of UK jobs, there are still expected to be redundancies when the scheme is wound down in August.

Increasing uncertainty

The poll by People Management revealed that if it wasn’t for the furlough scheme over half (59%) of HR professionals surveyed would have had to have made up to a quarter of their currently furloughed staff redundant. Meanwhile, 12% admitted that over 75% of their current furloughed staff would have been let go if not for the scheme. As employers are now forced to focus on what they will do with their workforce once the scheme finishes, the increasing uncertainty will inevitably create a worrying time for staff.

Changes to furlough scheme

The chancellor Rishi Sunak recently announced changes to the job retention scheme which will see the scheme closed to new applicants from July. Businesses will also have to start paying national insurance and pension contributions from August. This equates to around 5% per person, plus an additional 10% from September.

But while employees may have welcomed the announcement that from July workers can return to work on a part-time, only half of employers responding to the survey said they would take advantage of these new flexibilities.

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For more articles and updates about Coronavirus and furlough, visit our dedicated pages; Coronavirus Advice and Guidance for Employers and our Return to Work Guide.

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