As the UK is currently on lockdown with extraordinary measures in place across the country to combat coronavirus, reward management consultancy Paydata outlines urgent tips for businesses to consider that will impact the long-term engagement of employees.
- Consider the options available to ease pressure on pay budgets
The government’s bailout package worth £350bn to help businesses cope with the lockdown may mean that short-term reactionary redundancies may not be strictly necessary. Whilst the Chancellor warned that the government could not save every job, employers are being urged to consider alternative options, all of which may not apply to every industry.
There are mechanisms to give less work whilst retaining staff through contractual clauses for industries where demand ebbs and flows, for example manufacturing, hospitality and construction. Clauses in contracts (or implied clauses if the employer can establish it is commonplace practice) can cover lay offs, where workers are temporarily suspended. However, this option is time sensitive; the maximum length of a lay off is four continuous weeks or six weeks over a 13-week period. After this, the worker is entitled to redundancy. Alternatively, short-time working is an option, with reduced pay reflecting the reduced hours; again, this needs to be contractually established.
The third option is to furlough workers. This is good news for employers who felt that they had no choice but to make workers redundant to ease the pressure on their pay roll budgets at the start of the outbreak. Anyone who was made redundant from 29th February onwards can be re-categorised as a furloughed worker. The Coronavirus Job Retention Scheme, whereby the government commits to paying 80 per cent of the employee’s wage up to the cap of £2,500, will be backdated to 1st March. With this option there is no halfway house in terms of utilising the skills of the employees designated as furloughed. In order for HMRC to repay the salaries to the employer, they cannot work shorter hours or on a part-time basis.
- Communicate and remain transparent regardless of the option you choose
Providing clear guidance as to your intentions as an employer will be valued, as each party understands that the situation is evolving daily. Be empathetic whilst demonstrating the objective approach you are taking to balance everyone’s interests. Whether you are trying to agree new contractual terms with employees or communicating to an employee why they have been designated as a furloughed worker, this communication will define your future relationship with these individuals.
Selecting fair criteria to apply in determining whether an employee should be furloughed is crucial for employee relations. If the workload has not completely disappeared, then appropriate criteria needs to be set in place to provide reassurance to each individual that they have been treated fairly, especially where colleagues may not have been furloughed. Receiving 80 per cent of your salary to not work may be an attractive proposition to some but not for others, so developing an objective framework will help to communicate the decisions behind the decision-making process.
Employers are able to top up the government’s commitment to guarantee 80 per cent of salaries to 100 per cent, so this may be a useful tool in ensuring that pressure on pay budgets is eased for the time being, whilst not compromising employee engagement. Keeping lines of communication open will be key to managing the anxiety felt by all parties involved in managing these unprecedented circumstances.
- Review at every stage
Once an employee is designated as a furloughed worker, this information needs to be submitted to HMRC through a new online portal, which they are urgently setting up, alongside the system for reimbursement to employers. If your business urgently needs short-term cash flow support, consider whether you are eligible for a Coronavirus Business Interruption Loan.
As the government has pledged to review the lock down after three weeks, similar designated reviews should be put in place, to consider the changing circumstances. It is possible to take employees out of furlough depending on the workload of teams, which may vary over this period, but this should be used cautiously to withstand any potential later scrutiny and anti-abuse measures introduced by HMRC. HMRC may scrutinise whether the worker was necessarily furloughed if they stepped in and out of the definition. However, this will be carefully balanced with employers striving to allay anxiety from employees about the future of their role and whether furloughing will lead to eventual redundancies.
- Take a long-term view
The emergency measures enable organisations to prop up the salaries of those who are currently not needed amidst this uncertain time for businesses, such as in-house recruitment specialists. Yet it raises an important question about the long-term retention of valuable employees, a key asset to all organisations. Meeting staff costs now needs to be weighed against the future losses incurred from having to recruit new skills and talent. In addition to financially retaining existing talent, managing a remote workforce is also an important consideration for organisations at this stage, some of whom have not traditionally rolled out flexible working.
HR will set the tone for keeping calm and carrying on when it comes to supporting all employees through these challenges, including giving managers reassurance that business performance can be maintained with employees working from home. Extra support will be required for managers who are more set in their ways and adverse to employees having the option to work from home. HR can help them to understand how to support their teams in still getting their work done and how to overcome these challenges.
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The level of support organisations offer employees at this stage will have a lasting impact on employee relations and come to define them as an employer. A holistic approach to retaining staff, particularly considering how employers can support their wellbeing, will be crucial to retaining key talent in the long-run and attracting future candidates. Whilst some employers postpone projects and expenditure, outsourcing work to a trusted partner is one way to keep things moving forward when it comes to HR strategy and planning. Making use of Paydata’s pay and reward services can ensure that when restrictions are lifted and markets do recover, you are in a strong position to move forward.
If we can do anything at all to provide clarification and support about the options open to you in supporting your people in the circumstances, get in touch. Equally, in return for ten minutes of your time, receive a free copy of our Reward Management report showing how organisations are managing their workforces during this uncertain period alongside insights into the world of reward.
