When the furlough scheme ended in September last year, many were worried that the closure of the scheme would lead to a significant rise in redundancies, as business that had already faced the challenges of the pandemic, were no longer receiving Government support. It was estimated that 1.4 million people were still on furlough when the scheme ended on 30 September 2021.
Luckily, the reality was not as bad as anticipated with 87% of furloughed employees returning to work (3% made redundant, 3% left voluntarily and 8% ‘other’*). Many businesses held off on making redundancies so they could evaluate the post pandemic landscape. Extreme staff shortages and high vacancy rates at the time, created a (much needed) period of stability in the UK. With staff less likely to voluntarily leave their jobs, and employers keen to maintain staffing levels to avoid a very challenging recruitment market.
However, it is looking like things could be on a turn for the worse and the current economic environment paints a bleak picture. The latest redundancy data from the Insolvency Service shows that planned redundancies rose 103% in just two months in 2022, from January (8,869) to February (18,043)**.
Businesses are facing increasing financial pressures in 2022. From the current economic climate, the war in Ukraine and declines in consumer spending. The Bank of England is increasing inflation and National Insurance rates, increasing costs of borrowing, escalating energy and fuel costs, spiralling overheads. These additional challenges are likely to lead businesses to try cost cutting strategies to help them survive.
Any businesses considering making redundancies are required to consider alternatives first, to comply with consultation and time limit requirements, to establish fair selection criteria, to adhere to notice and pay obligations, and to complete HR1 forms where required.
If your business needs restructuring or redundancy support then please contact our Nockolds HR team on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.
*Office of National Statistics https://commonslibrary.parliament.uk/examining-the-end-of-the-furlough-scheme/
**The Insolvency Service https://www.gov.uk/government/statistics/monthly-insolvency-statistics-february-2022/commentary-monthly-insolvency-statistics-february-2022