As the Coronavirus Job Retention Scheme (CJRS) ends on 30 September, the Government has published final figures which show that furlough helped to support nearly 12 million workers in England, Wales, Northern Ireland and Scotland.
According to the latest statistics, around £68.5 billion has been spent on the furlough scheme to protect the livelihoods of 11.6 million workers by ensuring funding equal to 80 per cent of an employee’s regular salary is paid.
Although employers have been required to contribute 20 per cent of earnings in August and September, the scheme has continued to support around 1 million employees.
What next for employers once furlough ends?
The CJRS has played an important role in freeing up cash within businesses so that they have the money needed to fund their operations and manage debts.
However, many businesses will suddenly find that they have a substantial monthly employment bill from October, which could affect cash flow.
If they haven’t already, businesses must review the impact of full employment costs once the CJRS ends, so that they can implement steps that prevent a cash flow crisis.
With the cost of retaining employees being significant, employers may need to negotiate with their workforce to reduce hours, restrict bonuses and eliminate benefits, if necessary.
This process will require careful negotiations and should be confirmed in writing within employee contracts and the business’s policies.
In more extreme cases, businesses may need to cut costs in other areas or make redundancies if the additional employment costs cannot be absorbed.
If you are struggling with the management of costs due to COVID-19 support measures, such as the furlough or Bounce Back Loan Scheme, speak to our team today for advice.