Search
0203 327 0567

How to plan for bringing your staff back after furlough

For many businesses, the Job Retention Scheme has provided an invaluable lifeline during the challenging times of COVID-19 and the subsequent UK lockdown. Many firms have utilised the scheme – allowing them to retain jobs with 80% of staff wages being paid by the government – with 8.4 million people now on the scheme.

Earlier this month, Chancellor of the Exchequer Rishi Sunak announced that the furlough scheme would be extended to October, giving businesses more time to utilise the programme as they recover from the impact of coronavirus on their business. However, from August, it is suggested the government will only to be paying 60% of furloughed wages, requiring firms to front the 20% shortfall as well as enabling staff to work part-time.

As of next month, more and more businesses will be allowed to reopen in line with the easing of lockdown. Of course, to restart their operations, companies will need at least some staff – but some may find they are still facing financial struggles when it comes to paying their workforce in full. This is why businesses must now plan for when they can bring their staff back without rocking the financial stability of their business during its post-lockdown recovery.

In this blog, we have put together some tips for planning to bring your furloughed staff back to work while keeping an eye on your cash flow and allowing your operations to restart efficiently.

Work out what staff you need

If you are preparing to return to ‘normal’ operating, the first step is to plan what staff you will need to do so. While it may be tempting to bring back your entire workforce, you should make sure you can afford to do so – particularly if your business has faced reduced cash flow and profit over the last few months of lockdown.

If your business has suffered, it will be wise to begin your operations with a skeleton staff. Working out what ‘skeleton staff’ entails may include forecasting what demand you will be receiving upon reopening. It will also involve planning all the areas of your business that will be in use, and make sure there are staff to represent each part of your essential operations.

If you do find that demand is higher than expected upon returning to work, or that things improve over the coming weeks and months, you always have the option to gradually re-introduce more staff members into your business. By doing so, you can allow yourself to move towards a full workforce without overwhelming your business finances.

Understand how the scheme works

When preparing to bring staff back from furlough, it is vital to be aware of how and when this is done. For example, the scheme states that staff must be furloughed for a period of at least three weeks. This means that, if you have a member of staff you have only recently furloughed, you need to wait for these three weeks to pass until you can consider bringing them back, at least in terms of taking advantage of the job retention scheme. This should be incorporated into your planning.

Another part of the scheme to consider is the element of part-time employment from August. Currently, this will only be taking place from August – meaning that you will not have the option of bringing staff back part-time under the scheme until then. From this time, however, you can plan in part-time work for your team members, which may help you to move towards standard operations gradually. Understanding how the job retention scheme may be affected by this are key to your decision, so wait for further announcements before fully committing to this.

It is also important to remember that the scheme is due to end in October – suggesting the government intend to wean businesses away from furloughing by this point. It is therefore essential that your company plans for this, building it into your forecasts, as you may need to consider staff redundancies.

It’s also worth bearing in mind that the Job Retention Scheme is due to be closed to new applicants soon (pending an announcement from the Chancellor of the Exchequer) and that, once this happens, you may not be able to place any new staff onto furlough and this should be accounted for in your planning.

Create a careful financial plan

Having a financial plan in place can help you not only to plan exactly when and how you can afford to bring back individual staff members but also how your business can reach financial recovery over time. Your financial plan should also account for any reduced productivity and falling profit your business may have been or continue to be subject to.

As part of your plan, you should utilise the funding options available to you. Government support is currently available via the Coronavirus Business Interruption Loan and Bounce Back Loan schemes, both of which provide businesses with low-interest loans to help them cope with the burdens of COVID-19. Both initiatives are currently still open, so it worth considering an application and accessing the funding while you can.

Beyond this, there are many short-term finance solutions that businesses can make use of to help improve cash flow. For B2B businesses, these might include invoice finance, which allows you to access funding from your unpaid invoices before your customers paying, and trade finance, which enables you to obtain the imported supplies you need to fulfil an order without waiting for payment.

Another option is supply chain finance, which improves your cash flow by allowing you to extend your payment terms to your suppliers while enabling your large and SME suppliers to get paid early. Your lender pays for stock purchases directly for the buyer and is then repaid by the buyer at a pre-set future date; so you can release working capital into your business.

It is worth getting independent advice about the different financial options available to you, so you can work out, which might be the most suitable. With this knowledge, you can then make an informed plan as to what funding you will use when to get your business back on track.

Asides from using funding, you should also use your financial plan as a way of identifying your outgoings and whether they are essential. Trimming expenses can prove very useful in times of financial strain, so make a note of any you believe are no longer critical – even if it is just for the temporary situation – and take steps to remove them from your monthly costs.

Once you have created your financial plan, you should be better placed to forecast your future finances and when your business may be in a position to bring back your workforce gradually. If it appears that the financial strain may be too much, it may be time for your business to have difficult conversations about pay cuts and other measures you may need to put in place to survive.

Check social distancing guidelines for your business

Although lockdown may be easing and businesses able to return to work, this does not mean operations can run as standard. Instead, all workplaces must implement social distancing to protect the health of their customers and staff. Part of this means having to change the way your employees work and how many of them are in at one time.

Measures like changing shift patterns, staggered start times, and remote working may all be possibilities to reduce the number of employees present in the workplace. Depending on which measures you decide to employ, you will need to incorporate this into your plan to bring staff back from furlough to enable it to happen safely. It may even be that you refrain from bringing your entire workforce back until you have put the appropriate measures in place to allow them to work safely and in line with government advice. However, when you do bring them back, you will need to plan ahead as to where and when they will be working (such as from home).

You can find out what the specific advice is for your business or industry in the government’s guidance.

Get advice on furlough and how to improve business cash flow

Planning to bring your staff back from furlough can be tricky, mainly as this is an area few businesses will have dealt with before. However, doing so can help your business and workforce to gradually return to work without placing additional financial strain on yourself.

By bearing in mind how the Job Retention Scheme works, the need for social distancing measures and your business’s financial state, you can create an effective plan to allow your to return to a full workforce.

If you need assistance in creating a financial plan or understanding how to fund bringing your staff back after furlough, we can help. We can offer tailored advice for your business to help you understand what funding options are best for you and how you can utilise them to improve your cash flow.

Please call the team today for a free consultation or email [email protected].

Filed under: add_action ( 'om_the_article_category' );
|