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Countdown to the end of furlough – what payroll departments need to think about

To deliver on all of these changes requires a high level of pre-planning, of course. HR and payroll teams alike need to be fully aligned with the business so that they can be up to speed with the likely changes and prepare for the upcoming furlough cut-off date and the broader changes in employment legislation to come.

The furlough scheme, originally introduced in March 2020 as a short-term measure to support employers in paying their employees during the Coronavirus pandemic has been extended several times: most recently, in the March 2021 Budget, until the end of September. But with the end date of the scheme fast approaching, payroll teams have much to think about and focus on.

With such a disruptive year, there will inevitably have to be lots of changes to contracts of employment when workers return on October 1st. Some staff will want or need to change from full time to part time. In some cases, changes to the business will need to be reflected in changes to contracts. These are all challenges that the business and its payroll department will need to address.

There is no minimum notice period in place for bringing employees back from furlough but it is clearly good practice for businesses to start having conversations with staff as soon as possible because if contracts or other aspects of an employee’s contract have changed, there will inevitably be issues to address and concerns talked through.

Beyond furlough

In addition to the end of furlough, there are likely to be other changes to employment legislation that organisations need to be aware of over the coming months. Any employee that’s at risk of redundancy while on maternity, or adoption, or shared parental leave, already has the right to be offered any suitable alternative vacancy that is available. But the government is proposing to extend this protection to pregnant employees once they have told their employer of their pregnancy; as well as to employees returning from maternity, or adoption leave within the previous six months, and parents returning from shared parental leave.

To deliver on all of these changes requires a high level of pre-planning, of course. HR and payroll teams alike need to be fully aligned with the business so that they can be up to speed with the likely changes and prepare for the upcoming furlough cut-off date and the broader changes in employment legislation to come.

Being prepared
In terms of pre-planning, payroll teams will inevitably have a host of challenges to navigate in the run up to furlough and beyond. First and foremost, and often easier said than done, all the employers will need to ensure that they have the correct details in place for staff who have been furloughed. They need to know and have recorded if people have changed their working hours, their holiday agreements, or as already referenced, any changes have been made to their contracts. All this will need to be updated in the payroll system.

Modern payroll systems can also increasingly be date-tracked, enabling payroll departments to make changes ahead of time. Teams can enter the relevant data in the system before changes take place and conduct a trial run of the payroll system ahead of time to ensure the data is correct. In other words, they can get ahead of the changes and do preparatory work before people return from furlough, or move onto a new contract.

The employee dimension
This kind of streamlined efficiency is key, of course, not just from the perspective of the business and the payroll department in isolation but also in terms of how it positively impacts the employee experience. When employees return, it is critical that everything is 100% correct because any mistakes will inevitably have a negative effect on employee morale. If they are returning to a different world from the one they left, potentially 18 months ago, payroll teams and the businesses they work for have a responsibility to make that transition as simple and hassle free as possible. They need to feel that their re-entry into the workforce is a seamless and normal experience– and payroll teams need to help in that process by getting everything right for them from the get-go.

Preparing for furlough’s end
So, as they prepare for the end of furlough, what are the top priorities facing payroll teams? Ultimately, good communication is always key. It is important that furloughed staff understand what payroll and the wider business will be doing for them to ensure a smoot transition back into the workplace, supporting the business’ desire to provide an enhanced employee experience to those returning.

Ongoing process
These requirements are not a once only thing for payroll of course. They are part of an ongoing process. The government recently reported that they have protected 11.6 million jobs through the furlough scheme. And at first they made an 80% contribution to the programme. But in July 2021, it reduced down to 70% and in August to 60%. Payroll teams have already had to flex to meet those changes, so in a sense the latest changes are part of an evolving process rather than an isolated requirement.

Payroll teams have also already been mapping to the business requirements, with many organisations choosing to top up the 80% originally provided by the government to furloughed employees in the first instance and turn that into 100% instead. So change is nothing new for payroll teams who have been through the pandemic but it remains a critical priority that they get everything right for the business and its employees and they get it right first time. 

Looking ahead too, it will continue to be crucial that payroll teams remain flexible and adaptable and prepare for ongoing change in this time of continuing uncertainty. With Covid still an ongoing issue, the possibility of furlough returning in the future can never be fully ruled out.

Many businesses have made changes to their payroll systems through the pandemic to incorporate furlough and give all the relevant information to their staff. They need to ensure that they keep this in place and retain everything that they have set up in case they need to use it again. They need to be prepared both for every eventuality and also to match their actions with those of the business in the future, just as they have in the past. These remain busy times for payroll but as always being well prepared is at least half of the battle.

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