Calls increase for reform to furlough scheme

The Reform think tank has added its voice to calls to reform the furlough scheme to enable it to be used to top up short-term working as the lockdown eases.

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The think tank Reform has become the latest organisation to call for the Government to reform its furlough scheme to allow it to be used to top up short-time working as the lockdown eases.

It says countries such as Sweden, Denmark, Germany, and Canada have implemented schemes which allow for employees to work for short periods and the government to top-up their salary.

It says that many UK businesses are facing “an impossibly difficult decision”:  either to furlough staff in order to access state support, but drastically reduce their ability to continue or to not furlough staff, have no access to state support, and attempt to maintain payroll.

It says: “Moving towards a short-time working model, as opposed to a blanket ban, gives more flexibility to employers now but also has clear benefits for mitigating the effects of lockdown on employees mental health. Further, it may be a necessity to move towards this type of model, in the event of a phased exit from lockdown as the government has indicated will be the case.”

Reform also proposes a clawback mechanism be introduced so that all companies who reported profits over a set threshold during the pandemic period have to pay back some, or all of their funding.

And it wants to see the Government make it easier for employees to report fraud, where employers furlough them but force them to continue working.

It is reported today that the Chancellor Rishi Sunak is hinting that he could provide an extension to the employee furlough scheme for businesses in sectors worst hit by the coronavirus. The job retention scheme is due to end on June 30th, so companies will need to choose in the middle of next month whether to begin the statutory redundancy consultation period.

The Chartered Institute of Personnel and Development (CIPD) has published the results of a survey of more than 1,000 employers which shows that almost half (46%) have already furloughed staff, while another 10% plan to do so. However, more than three quarters of employers that have already furloughed staff (76%) or plan to furlough staff (78%) said that making the scheme more flexible to enable furloughed staff to work reduced hours would be useful.

Seven in ten employers (70%) that have already used or are considering using the furlough scheme said that up to half of furloughed staff could potentially work reduced hours, while 16% of these organisations reported that more than 50% of furloughed staff could work reduced hours.

The CIPD says that changes to the scheme to allow short-time working would enable hundreds of thousands of furloughed staff to work in some capacity, helping to protect jobs, support businesses and reduce the burden on public finances, as many employers would require a lower wage subsidy from the Government.

Peter Cheese, the chief executive of the CIPD, says extending the scheme would give employers more certainty and remove the risk of a “cliff-edge exit” from furlough straight to redundancy.

The CIPD also says that, in addition to greater flexibility, employers would also like the JRS extended by three months, to the end of September, with 60% identifying this as the most important labour market policy change that would help them deal with the impact of COVID-19.

Meanwhile, a survey by People Management found most HR departments have avoided furlough in their own teams, with 63% of respondents saying they have seen no change to the current headcount of their HR teams and 2% saying they are planning to expand their HR function.

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