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How to maintain reputation while navigating closure of the furlough scheme
08/07/2021
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Employee and Layoffs headline
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Natalie McEvoy
Natalie McEvoy is counsel at Slateford with extensive experience across the spectrum of reputation protection

From 1 July 2021, the rules of the government’s furlough scheme changed to require a small employer contribution. An employee who is still not working will continue to receive a stable 80% of their former working salary, but in the month of July, 10% of that will come from the employer (70% from the government) and come August and September, 20% will be employer-paid (60% government contributed). The furlough scheme is due to close completely in September, bringing to an end 19 months of government subsidies designed to keep workers safely at home.

Most would accept that it is impractical for the government of a highly vaccinated population to continue to recompense employees without work. Practically speaking, then, how can employers seamlessly transition without reputational damage or operational interruption?

Many employers will observe that business, in certain sectors, has not returned to its former levels. The closure of the furlough scheme will press them into difficult decisions regarding whether they can meaningfully keep those employees busy. They may argue that the furlough scheme is closing before public confidence has returned and general wariness of close contact has been rehabilitated. But if not now, then when?

Certain sectors may have changed forever; perhaps gyms and some of the retail sector will reduce headcount permanently now many have adapted to online fitness and shopping. Other sectors may continue to employ more; delivery drivers and online tutors will likely remain in demand for some time yet. Waiting much longer assumes that we are inevitably returning to where we left off, when, in fact, the pandemic has moved us on.

Inevitably, very challenging redundancy decisions loom in September in relation to those workers who cannot be returned to their previous roles and contractual hours. It is imperative to manage any process involving redundancy or amendments to contractual hours in a transparent and compliant way, so planning for those possible eventualities should begin now. The existence of the furlough scheme and the fact that an employer has needed to use it for 19 months in relation to a particular employee will not be seen as a fair reason for redundancy in itself; however, the fact that a business has permanently reshaped during that time and that certain roles have disappeared as a consequence of new consumer behaviour, may well be.

As with all reputational challenges, how you treat your employees will likely be determinative of how you are considered by others

The main reputational risk of “Furlough 2020” was misuse of the scheme; we saw many stories of intentional or unintentional misuse of the scheme, where money was falsely claimed or misused, or indeed – in the earlier stages – where the scheme was not used and employees felt pressure to work as before. The main crisis flashpoint of “Furlough 2021” is likely to centre around the mass unemployment of workers previously furloughed.

So how can we best prevent reputational damage and business interruption to an organisation that cannot return all its employees to work? Preparation, preparation, preparation.

Quantify the way in which your business has changed. Project what you confidently expect the next five years to look like for your organisation. Flag early with your employees that your business has changed as a consequence of the pandemic, and let them see the supporting data. Conduct a thorough review of what, if any, new or altered positions you may be able to offer, so that those unable to return to their prior roles have some possibilities on the table at the end of the furlough scheme.

Ensure open lines of supportive communication for affected employees, which will aid in reducing the need for them to speak publicly of their frustrations. Consider whether you are able to reach out to other companies who may be able to offer employment to some of your workers. Ensure that employees are well supported in the transition through redundancy and into unemployment, with good advice from independent sources and mental health support where possible.

A quarter of a million people in this country are expected to face unemployment when the furlough scheme ends. We know that mass unemployment affects families and communities badly; more families will need to rely on food banks, free school meals, and other benefits, not to mention that if unsupported, mental health problems can arise which make any later return to work much more challenging.

As with all reputational challenges, how you treat your employees will likely be determinative of how you are considered by others; consumers, investors, and other stakeholders. Investing in managing that transition as well as you are able will be money well spent in protecting your brand and future business.