Short-time working model should be adopted for furlough scheme
Think tank Reform has called on the government to change the coronavirus Job Retention Scheme (JRS) to include a short-time working model.
Currently, employers must choose between furloughing staff to access state support and thus reducing their own ability to function, or to carry on as usual and miss out on state support during a difficult economic period.
Reform advised replacing the current furloughing system with a short-time working scheme where the government can top up the salaries of employees working shorter hours.
The think tank suggested the move would give employers greater flexibility and help avoid mass redundancies when the JRS ends in June.
This echoed a CIPD report published earlier this week which warned the JRS could be a ‘waiting room for unemployment’.
Reform advised the government to introduce a ‘clawback’ mechanism under this new scheme to ensure money gets to those who really need it where companies who reported profits over a certain set threshold during this period would need to pay back some or all of their funding.
It also suggested that the government needs to do more to combat fraud within the system by launching a marketing campaign to publicise the penalties and setting up the promised coronavirus hotline and online portal to report abuse.
Yet Rachel Collins, employment law expert at Stevens & Bolton, said the proposals could help prevent future redundancies.
“A key lesson has been learnt from the financial crisis of 2008: economic recovery will be faster if businesses retain a skilled workforce. As such, maintaining the majority of the workforce on ‘short-time working’ could be key to the UK securing economic stability in the long-run.
“Many new challenges will arise as lockdown restrictions are gradually lifted and existing cash flow problems will not go away overnight. Reform’s proposals to amend the JRS to allow for short-term working would therefore provide much needed support and may help to avoid mass redundancies and unemployment.”
Yet Collins acknowledged the proposal could be open to abuse and difficult to police.
“Businesses could see it as an opportunity to operate normally whilst using government grants to support their wage bill.
“In practice, employers will be required to manage daily/weekly fluctuations in demand and capacity, and, if employees’ hours are fixed under such a scheme, they may not have sufficient flexibility to quickly react to changing demands.
"Employers may therefore wish to look at implementing schemes tailored to their own requirements to achieve the required flexibility."
Collins advised employers should always use a “fair selection process” to reduce the risks of discrimination claims being brought by employees.