Employers up and down the country are defaulting to furloughing their staff – when HR directors should be asking whether they really need to, indeed whether they are and are morally right to. Josh Sunsoa believes some employers are “on the take”.
I suspect firms are using the scheme simply as a way of controlling costs, or even giving staff a status that might give them false hope about their future status. After all, why get rid of someone now, when they can be easily furloughed?”
Furlough. If we’re being honest, it’s a word many of us hadn’t even heard of just a few weeks ago.
But if projections by the Resolution Foundation prove to be correct – that 12 million will be put on what is effectively gardening leave – then we’re in for one hell of a time. Three days since opening its Coronavirus Job Retention Scheme portal (22 April), HM Revenue and Customs said 435,000 employers had claimed wages of £3.8bn on behalf of 3.2 million employees.
Don’t get me wrong. There’s absolutely a reason for it. We’re living in unprecedented times. By the impositions of government, many businesses – through no fault of their own – have lost practically 100% of their revenue. Compensation, in essence to hibernate these organisations, might be the capitalist solution of last resort, but it’s a solution adopted the world over. And it’s one that ultimately the taxpayer will have to bare.
But that’s also why I’ve got such a big problem with it. It’s for one main reason: Has anyone really stopped to think about whether HRDs really should be so blatantly, for want of a better phrase, “on the take”?
Already we’ve seen the seeds of a furore surrounding multi-billion-pound football clubs. It was Spurs and Liverpool initially, before both U-turned due to a public backlash for furloughing its non-playing staff while continuing to pay £100,000-plus weekly wages to its star players for doing nothing.
Last week Victoria Beckham was lambasted for furloughing 30 staff from her fashion label, despite having her own personal fortune of close to £335m. But these high-profile examples are really just the tip of the iceberg and this should be troubling to more people.
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All around me, I’m seeing a mini-industry emerging, of lawyers, consultants and other HR quidnuncs all advising firms place their staff on furlough regardless of whether they need to.
The attitude is “why not?” Government is giving out free money. Not only is there a scramble to take the cash without really thinking about why (or if) it’s actually needed, I suspect firms are using the scheme simply as a way of controlling costs, or even giving staff false hope about their future status. After all, why get rid of someone now, when they can be easily furloughed?
Businesses are either deciding for themselves, or are being told to take advantage of a situation while they can. It sits uneasily with me because essentially, the ethics of whether it is right, or wrong, or necessary, have gone out of the window.
Staff in businesses that are cash-rich, for instance Disney, are being furloughed – companies which could easily ride this crisis. Why aren’t HRDs pressing their CEOs to say, do we actually need this help? Why aren’t they asking: “Are we depriving money to firms who really do desperately need help?”
I’ve no doubt my utopian view of the world will be met with derision – why should companies burn their own cash reserves when government can write a cheque for them? But to those with this view, I say they’re missing something. In times like these, I don’t think employees should be treated as people that firms can simply “do a deal with government” with.
Employers all harp on about being responsible to their communities, and to the society they are a part of, but how is this being good to society? It’s entirely likely many firms that have no cash reserves, will nevertheless go under. Meanwhile, big multinational corporations will say, “thank you very much”.
Ultimately, the problem with furlough is that it’s a scheme rather than anything with watertight legislation behind it. My preference would be that government sets more legislative rules, so that there is protection for businesses who really need it. Maybe, for example, it should disqualify firms from having government money if they have X-months’ worth of their employees’ salary in the bank – just like Universal Credit already prevents individuals with large savings from taking taxpayer money.
Research by XpertHR last week found that just 35% of firms plan to top up their furloughed staffs’ salary from 80% to 100%. Right now HRDs need to take leadership about what the public, as well as internal brand reputation damage actions like this cause.
At the moment, I feel the temptation to take free money seems to have got the better of us all. It’s sad to see business being done in this way. I wonder how many HRDs will really stand firm and ask what appears to be a very moral question – do we really need to do this?
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It’s deluded features like this that reduce the influence of HR professionals, and damage the reputation of the CIPD.
Does Sunsoa really believe that HRDs are able to block a decision by FDs and the board?
Furthermore, does he think that the treasury are so stupid as to not have factored in measures to deal with organisations who abuse the rules?
For goodness sake, stop trying to generate headlines and get real!
Agree its a key part of CSR, only where there is no alternative should a Company embark on Furlough. There should be na end of year audit to Check no manipulation has taken place and empkkef9that did furlough did so to ‘protect their staffs jobs only’
All well and good for Disney but most people don’t work at Disney… How many people work for small and medium size businesses and don’t have the work. Even Vets are being furloughed due to the down turn in work?!
The real question is who will pay for the separations when they come? Because some businesses will not reopen if the situation goes on for another 10-12 weeks. Some people’s work is no possible from home and if there is zero demand what then? If it’s a few weeks which is where furlough was designed to cover I support it but it looks like from the start a much deeper problem everywhere. Who’s working on the rentals for sme like the family restaurants and coffee shop?
Thank you for this. My employer furloughed me as soon as the word was mentioned and their reason was the fact that they needed to protect their reserves. What made matters worse is that they furloughed staff who cost them less yet colleagues who earned three times our wages were and are still on the roll. If anything this scheme has enabled me to understand what sort of employer i work for and where their morals lie. It’s disturbing that employers have abused the scheme which is meant to help those in “need”.
I completely agree, Josh. Sadly my small organisation is in a collective process as the revenue impact of the current situation is dire, and the shorter-term impact on cash flow is potentially catastrophic. We’re not using furlough as we know these roles will not be viable afterwards, and using the CJRS, whose intention is to supposedly avoid redundancy, would be morally wrong. Of course, explaining that to people who could do with an extra couple of months’ income before notice pay and redundancy pay is proving to be a challenge. But the pain of that in the short term is a lot better than dealing with bigger disappointment and accusations of dishonesty in the long term.
D not sure you would see it that way if you were one of your employees. As I understand it your not furloughing them just letting them go. What are they supposed to live on?
Put them on the JPS for god sake and do the best you can when this is all over.
I think you’ll find a lot of the British public will be behind you, especially as at the end of the day the money will need to be “clawed” back in one way or another.
The people receiving this money will in one way or another be repaying what they’ve received and not the companies who will still no doubt profit at the end of the day. Or are they planning to make it so the companies do pay back the money? I hope it’ll be the companies but because that may mean the companies being set up or off the country I can’t see it.
Great article I have been saying exactialy this for weeks now I work for a big multi national who need government handout to furlough its staff on 80% yet they payed £96million last year to our MD as a bonus yes that’s right as a bonus not wages or anything else as a bonus
I do feel sorry for her though as she only took £42million after tax
I have been increasingly thinking this and am glad you’ve expressed it so well. Thank you. I find the blanket approach to ‘furloughing’ uncomfortable to say the least.
So, so true in the free money.
Having worked in a large global company as a chef on zero hour contract at a football club.The timing was perfect for this international company as there were rumblings of losing money.
Here is the thing. I work with about 15 chefs, same hours same contract and low and behold, some get and some don’t. Having written to HR the replies are ambiguous at least, even with direct questions.
Holding their reserves? Very likely. It’s discrimatory at best and not, pardon the pun, not a level playing field.
It has as someone on here put it well, show the company willing to help and those that are not
I completely agree. I know my employer has furloughed all of its staff, despite being cash rich, but had ordered all of their staff to ‘voluntarily’ continue to do their jobs. Everyone’s been told they don’t have to volunteer, but if they don’t it’s been inferred they might not have a job to go back to ‘in these troubled times’. To make it wide, it’s impossible to report this to HMRC, when I contacted them, they told me to go to acas!
If you have any evidence of this send it to the press. These firms need to be named and shamef
Many of my clients are facing a different situation, where they have work for their employees, but are being pressured into putting staff on furlough, because those employees don’t want to come into work (these are jobs that can’t be done at home). Where there is work to be done. I don’t have any clients who are using the furlough scheme. However, where there is no work for employees (which can still be the case for Companies like Disney) HR Directors have a legal requirement under the Companies Act to make decisions in the best interests of shareholders – which trumps any view of ‘morals’. They should, therefore, absolutely be making use of the furlough scheme.
The furlong is there to protect people. It might look as though some are taking advantage but alot of people who would have lost their jobs are being helped. I am one of the furlonged. My job became non existant once staying in came about. My company has also offered training to enhance our jobs when we return so that if it ever happened again I would be in a better position. I think it has made some companies look at how they run their workforce.
I am so grateful to be furlonged because I would have so many more worries if I didn’t have my salary. Mine is also being topped up. There are some genuine employers.
Exactly! I can’t believe people are being negative about this scheme. It’s there to protect people during this time and to stop being made redundant which would leave them really struggling financially. I too am so thankful that my company furloughed me.
To generalise the way you are doing is to make a mockery of the economic situation the country is facing.
Without knowledge of the future liabilities of a firm, just asking if they have the employees salary in the bank is a stupid question.
If there is not enough to pay the bills the company will fold and there will be no company at all left to come back to.
If a Board has to potentially look at being closed for 3 months then wages are not a major concern. Bills such as rent, IT, Operations, Stock etc will dwarf most employees costs.
So having cash in the bank is ok but most of it is earmarked for something in the future and therefore if the long term cash flow projections show a shortfall then furlough is the only sensible course.
Lets not forget any traded company has a fiduciary duty to shareholders not to put the company and therefore the shareholders, often pension funds, in jeopardy.
I am sure you would be the first to complain if many of the companies your pension is invested in started to haemorrhage cash without taking advantage of the options available to them
And equally please stop thinking most celebrities wealth is stuffed under their mattress. VB and others have most of their wealth in homes and shares in companies. Therefore they cannot simply pay people wages from their bank accounts. There is also regulations and laws against such behaviour to stop people using companies as personal playthings.
So before making ridiculous claims alongside the tabloids please look into the basic rules about owning and running a business first.
Luckily the people making most of the decisions are doing so based on more information than your crass generalisations.
I think the government should have made it compulsory for employers to top up to 100% unless they could prove they didn’t have the necessary reserves.
It is also hoped that the government should remind employers of their duty to have the statutory consultation periods if they seek to make redundancies at the end of this.
Having spoken to lot of people, having done lot of research it appears majority of big names have definitely taken advantage of this scheme at the cost of taxpayer without needing to. These companies could easily use their big fat cash reserves to take on the cost (if at all genuine) instead they used FREE cash. This is also true for lot of private schools too, my children’s school have furloughed 75% of their staff, 3/4 sites closed and yet have not passed any savings on to the parents. Infact this scheme has helped richer to get richer, and I was very surprised with people like Peter Rigby with their personal wealth increased considerably and yet took advantage of this scheme within literally minutes of the announcement. I was even more surprised by Victoria Beckham decision to furlough staff. Having said all this, there are few companies who are not taking on furlough to avoid going through internal restructuring to save their own skin, portray stability to shareholders and letting go of staff when they could and should take this scheme to save employees jobs.
Is it not true that some companies are keeping
Too many staff furloughed whilst overloading
Those that remain .
Whilst workloads built up they choose not to bring personnel back off furlough and when
Complaints come in that they aren’t fulfilling their contractual obligations they blame the current situation .
I am talking about construction industry
Building control in particular who should be taking calls on queries ,bookings etc to allow the sites to get back on track and allow money back into economy.
How many companies will realise that they can make productivity cuts? I know at least 1 organisation who have realised that applying changes to make teams more productive they are managing perfectly well with half the size team, the senior manager has told me that once the crisis is over he will be pushing for a top to bottom role assessment with the intention being to permanently halve the headcount of many teams using technology to make them more efficient. A side effect of Covid could be large scale reorganisations and redundancy