The figures announced today show that the economy has dropped by a record level of just over 20% in April. That comes on top of the announcements by Heathrow airport and Centrica that they are cutting thousands of jobs.
The timings of the announcements of job losses is no real surprise. With the Job Retention Scheme payments starting to taper down in August and employers being required to make contributions to pensions and National insurance payments, many businesses will be looking at how they can afford to keep employees on the payroll with little or no income. Although for small businesses NI and payment pensions will be relatively small, for an employer the size of Heathrow Airport, they will amount to tens of thousands of pounds. Larger employers have rules applying to them in terms of timescales for redundancy consultations when they are making more redundancies. If its 20 to 99 employees, they must start the consultation process at least 30 days before the redundancy date and if its more than 100, then its 45 days. If it’s 45 days from now that takes us to 27th July – just before the Job Retention Scheme payments change and employers have to contribute.
Employers in the SME market will be asking themselves the same questions as larger employers – how can I keep staff on and pay the contributions I will be required to with no income? This will be particularly difficult in the pub, café and restaurant trade and the small independent retailers. How can they have enough people in their premises spending money to make it commercially viable to be open when social distancing will severely restrict the number of people allowed in.
SME employers will undoubtedly be thinking about redundancy. This is often a much more painful process in a small business where there is much more direct contact between employer and employee, and often long-established relationships.
My advice is – try to make redundancy your very last option. This is the time to be creative in your working relationships with your employees. If you have a small core of long serving, trusted employees you might find that if you suggest some temporary flexible changes including everyone taking a cut in hours, even a cut in pay, or periods of unpaid leave. Although you can’t impose this sort of thing (unless you have very specific clauses in your contract of employment, and even then they could be subject to challenge) you might find that with consultation and agreement most staff would prefer some temporary reduction rather than termination of their employment. As long as your employees agree to the change, you can make it. You should make a written record of what has been agreed, together with built in reviews and, get a signed acceptance by the employee to make sure it is legally binding on all.
Tough times are undoubtedly ahead for all of us but if you are able to be creative and flexible with your staff, and they come on board with you, you may be able to preserve your skilled, trusted workforce to be ready to take advantage when things start to improve.