Hundreds of businesses at risk of insolvency due to furlough payment delay
Hundreds of businesses are at risk of becoming insolvent, says the Recruitment and Employment Confederation (REC).
In a letter to the businesses secretary Alok Sharma, the REC warned that many businesses in high cashflow thin profit margin sectors such as recruitment, hospitality and retail will not be able to furlough temporary staff and the delay will heavily impact the job market.
This is because the government's support payments will not come through until May.
The REC has created a list of four solutions to help workers, companies and the government.
These were to allow high cashflow businesses to claim emergency grant support for wages and ensure that banks and insurance providers provide necessary support quickly.
It also recommended the government should cover Statutory Sick Pay for two weeks regardless of the size of the businesses or the workers’ contract and to support directors of owner-operated limited companies who have been overlooked by government.
“Time is now running short for too many good businesses- and failures over the next few weeks will damage the job market’s ability to recover,” warned Neil Carberry, CEO of the REC.
“Government needs to understand that those with weekly payrolls are struggling more than the rest of business – not everyone is paid monthly.
“Recruiters have a huge role to play in helping staff key industries and find people new jobs as we recover from this. But many such businesses operate on a high cashflow, low profit margin basis. They cannot wait months for support.”
For HR teams currently working in these high risk businesses, mental wellbeing coach Tahirih McLaren-Brown said communication can go a long way to resassure employees.
“If HR managers and company directors can clearly communicate what will happen, what options staff will have for their pay or government assistance and how they will talk to each staff member individually, this will ease the initial panic employees will be feeling.
“A support network can be set up amongst teams with managers being the first point of contact and being responsible for the wellbeing of their team.”
Mclaren-Brown also emphasised the importance of HR looking after itself first.
She added: “HR will be overloaded with employees wanting to speak to them and many of these conversations will undoubtedly be very draining.
“Making sure they have family or friends to support them, that they're looking after their health with sleep, exercise and relaxing activities, and they aren't working crazy hours will mean they can lead their people through this crisis without burning out. You need to fill up your cup before you can fill up anyone else's."