Business experts

Expert opinion: Furlough is ending – are you prepared?

Written by Mike Lloyd on .

Mike Lloyd


As we move into autumn, furloughing or the Job Retention Scheme, which has enabled many business owners to retain their staff during the Covid-19 pandemic, will end.

This is the time to take stock and plan for the future of your business whether for recovery, growth or both– while you are still able to receive government support. For each business that plan will look different but, as with everything in business, having a plan is critical.

A brief re-cap on the future timeline should focus the minds of any company owners or directors who have made use of the scheme and are now considering their next steps.

From September 1, the government’s wage subsidy drops from 80 percent to 70 percent, up to a maximum of £2,190 per month. Employers are already paying National Insurance and pension contributions.

From October 1, it will reduce to 60 percent, up to a maximum of £1,875 per month.

On October 31 the scheme is currently scheduled to close.

Here are three scenarios you might wish to consider as furloughing is phased out:

Ending furloughing in your business

If you have furloughed all or some of your staff, now is the time to plan their return to work if that is to be the case. Do remember that you can claim a grant of £1,000 per employee from the government to support a return to work.

A stepped and flexible approach is likely to be better than waiting until the last minute for this. Planning ahead will help you consider:

  • Which job roles and skills are still needed?
  • Are your furloughed staff all needed back at the same time?
  • Do any of your staff need more flexibility, eg caring commitments or shielding?
  • Is flexi-furlough a consideration moving towards the end of the scheme?

To end furlough, your employee must receive a notice in writing. Be prepared for conversations around anxiety about returning to work. The key questions would include: is return to the business premises essential? Is it safe? Is remote working a viable option?

How to deal with changed business circumstances

Your business’ circumstances are likely to have changed during this challenging time and you may have had to make difficult decisions around roles and responsibilities.

Some business owners may find key members of staff have made personal decisions to leave and you have skill gaps which you were not expecting as a result of lockdown.

The situation we are in is unique, so employees and employers will be affected in different ways, and therefore they may be willing to work differently.

Review the financial health, balanced against your new requirements, goals and aims. You can then take the appropriate actions with understanding and compassion.

Employees on furlough can be made redundant, but the process needs to be planned to avoid damaging claims for unfair dismissal. Potential considerations might include:

  • As an employer are you able to help your employees to find new roles in-house or elsewhere? 
  • Can you avoid redundancies by asking relevant team members to consider working reduced hours or in a different, more flexible manner?
  • Do you want to recruit more staff to support expansion or a new way of working?
  • Are you fully conversant with the new legislation ensuring that furloughed employees who are made redundant receive redundancy pay based on their normal earnings?

Planning all of this, whatever your particular circumstances, is critical so that you are best placed to thrive and grow as the scheme ends.

What if your business has grown?

For some business owners and teams, this has been a busy time. You may have adapted successfully or your products or services may be in high demand.

You may have furloughed some administration staff, perhaps around the management of a building or premises that you have not been using during this time or you may have trainees that you furloughed them because it was not practical to train them during the pandemic.

Whether you have only a few staff on furlough, or perhaps none at all, planning your financial future, goals and cashflow are just as important.

If you are in the fortunate position of thriving during this time, there are still questions which need to be considered:

  • Do you need to invest to increase market share? 
  • Do you need to invest in new technology to work smarter?
  • Do you need to invest in more people to ensure capacity or to fill a skills gap?
  • Do you need to increase your marketing budget?

To maintain and embed the success you have, a financial plan is vital post-furlough and beyond.

Mike Lloyd is managing partner at Haines Watts Swindon