I’ve been in business for 11 years and have faced various challenges that have been out of my control: the financial crisis, Trump, continuous rounds of elections, technology breakthroughs, war and of course Brexit.
You start a business knowing there will be difficult times ahead but as your experience grows you become accustomed to being able to respond to these challenges. COVID-19 has hit all of us hard. Not since the Second World War has the world faced such disruption.
I have never been so acutely aware of PESTLE, first year stuff if you did any kind of business orientated study. This acronym outlines the external influences on a business over which you have no control:
COVID-19 affects each one of these areas regardless of what business you are in.
Last week I took the decision to furlough over half of my team. With the full force of PESTLE hitting Henry Nicholas I had no choice but to accept Government help during this difficult and unprecedented time. And this is exactly what this is…help. Help for British businesses to keep their employees so that when we come out the other side, people can return to work and the economy can bounce back. It was painful. I felt as though my business had jumped back five years but we are in survival mode, as an individual business and as a country. Here’s my tips on furloughing:
Do it face to face
Whether you are a line manager or a business owner it is essential that you deliver the news to your employee face to face. There are many free online meeting tools out there (Google Hangouts, Zoom, Facetime, Skype, MS Team). Even if you have a large team, make the time to do this “face to face”. Your employees will be worried, they may feel like they’re losing their job, so please make time.
Explain what “furlough” means
Most people haven’t heard of the term “Furlough” before now, so don’t assume your employees are reading Government updates. Ask them what they know but then take time to carefully explain it to them. It’s useful to plan what you’re going to say, maybe with a list of bullet points. Here is a useful guide:
- Furlough is part of a new ‘employment protection scheme’ introduced by the Government designed to stop people working and interacting to prevent spread of the virus, whilst protecting their jobs through the Corona Virus crisis.
- Government will reimburse employers for 80% of employed people’s salaries for up to three months and will review it after this point. The current scheme is due to run until May 31st 2020.
- Details are still being put together by government, but what we do know at this stage is that a ‘Furloughed’ employee won’t be allowed to continue to do work for the business and is not allowed to do any other form of paid working during their contracted hours.
Ask for their consent
It is critical to gain consent from each employee. An employee must agree to be furloughed and agree to be paid 80% of their salary. You do have the choice to pay 100% of your team’s salaries but the Government will only reimburse 80%. The alternative to furloughing may be redundancy. This is achieved via a Furlough Leave Agreement – email me if you’d like a template. Mogers Drewett give a clear explanation here.
You must give a date the furlough will come into effect.
Explain why your business is doing it
It may seem obvious to you, but it may not be obvious to your employee. You should emphasise that COVID-19 has bought about an unprecedented set of circumstances. Whilst the business isn’t working at all, or at a reduced capacity, we need to accept Government help. We want our businesses to bounce back after the pandemic and we need them to be back in their jobs, building our business back up.
Ensure that each employee understands the financial impact of furloughing. It’s a good idea to calculate what each employee will receive in the coming months (you can do this here https://www.thesalarycalculator.co.uk/ ). Give them a total amount – 80% of their salary equated to after tax, NI and Pension deductions. At the time of writing this it’s not clear what deductions will be made so I suggest you assume deductions will continue as normal. You could also outline what they would usually be paid, and the difference so it’s clear how much less they’ll receive.
How will I be paid
Explain to employees that they will be still be paid by you on the same day of the month. Businesses will be able to reclaim furloughed wages through HMRC. This will be reviewed by the Government at the end of May 2020.
Which roles are being furloughed?
For me this was straight forward (anyone who has been with the business under five years) but I appreciate this is completely different for each business. If you are furloughing your entire team this is a moot point, however if you are not you should be prepared to explain your reasons transparently.
Can I stay in touch?
To me this is the most important part of any discussion you have with an employee being furloughed. You must emphasise that this exercise is taking place out of necessity and is by no means any reflection on their performance. Reassure them that they are still a valued employee and that staying in touch is very important (although they are by no means obliged to). At Henry Nicholas we are setting up a weekly “drink and drop in” every Friday. I am lucky enough to say that all my employees are great mates. They are still employed by us and still very much part of what we do!
Explain to each employee that they will receive a Furlough Leave Agreement. Ask them to send you an email with their personal email address stating they agree to be furloughed. As an employer you will need the personal email address to send out the Furlough Leave Agreement. Reemphasise how important they are to the business and that they can contact you at any time.
I hope my experience is helpful to you, and of course, you should seek your own legal advice.
I never expected this, none of us did, but we have to protect our businesses and our team’s jobs and furloughing is giving us the ability to do this.
Please contact me if you have any questions or comments.
Here are a few links you may find useful: