Employees opting for reduced working hours are playing their part in helping avoid a redundancy cliff edge when Government furlough funding ends.
Jane Watson, Head of prism HR, our human resources consultancy service, featured in today’s Scotsman and Edinburgh Evening News (30 September 2021) regarding evidence she says is emerging that job losses on the scale anticipated by many from October may not come to pass.
The UK Government’s Coronavirus Job Retention Scheme, which has latterly allowed businesses to claim 60% of a furloughed employee’s pay, ends on Thursday 30 September. Fears were widespread that this could trigger a wave of redundancies from businesses that had held off making cuts while the support was in play.
But Jane 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 SMEs - 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.
“There is, unfortunately, no avoiding the fact that some employers will shed jobs, with areas hard hit by the pandemic, such as hospitality, particularly vulnerable. But, hopefully, fewer losses than were anticipated will be made.”
Predictions of fewer redundancies than feared are backed up by recent figures from the Insolvency Service.
They revealed 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. That’s half of the pre-pandemic monthly average.
Jane believes some people offered reduced working hours may be amenable to them because they fear they may struggle to find another position in their area of work. Others, she says, are making requests because they have taken stock of personal circumstances during the pandemic, perhaps while on furlough.
She added: “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.”
Almost one million jobs in Scotland have been furloughed since June last year.
According to UK Government statistics earlier this month, there were about 116,500 people in Scotland on furlough at the end of July. That’s the lowest level since the scheme started last year and represented a 26,500 fall from 143,000 in June.
The Insolvency Service’s HR1 forms give an early indication of moves in the labour market, months before they show up in official unemployment figures.