From the 23rd March 2020 the Government introduced the furlough scheme along with a range of other initiatives as a means of supporting people, businesses and the economy. The scheme has enabled staff to remain employed yet still receive up to 80% of their wage. Businesses, however, will have continued operating and although the scheme is set to run until September 2021, there are still lots of businesses that may trouble to pay staff once the scheme ends.
How can I pay staff after furlough ends?
If you believe that you need the staff who you currently have on the furlough scheme, as the economy continues to pick itself up, but your concerned about the immediate impact, there are still other finance options and government schemes you can use:
- Bounce Back Loan Scheme – This is a government backed loan that is designed to provide fundamental economic benefit for the business. Businesses can get a maximum of £50,000, with the money available to be used on wages.
- Invoice Finance – This is based primarily on the value of your unpaid invoices and allows businesses to receive an injection based upon the value of those invoices. Once the money from those invoices come in, the business is able to pay back what they owe, minus the commission of the finance company.
Can I make staff redundant after furlough?
For some businesses and sectors alike, trading and life will never be the same again. With higher levels of online trading and less footfall for brick-and-mortar shops, it could mean a huge reduction in customer levels. This could well mean a reduction in your overheads and staff.
Businesses are completely entitled to make redundancies to staff once the furlough scheme ends, however, it is key to follow the government guidelines in order to protect yourself from any claims of unfair dismissal. Employees must be selected appropriately for redundancy and the process must be follow the correct order.
I’m worried my company cannot survive after the furlough scheme ends
Come September 2021, the furlough scheme is set to end and the government support is set to stop permanently. When the financial support is removed, lots of companies may discover that they are in serious financial distress and may mean that they are simply unable to continue trading.
How we can help
We can offer free, impartial to companies who are facing financial distress and are concerned about what problems you could be facing once the furlough scheme ends. If you’re worried you won’t be able to pay your staff and that you might have to stop trading, we can help talk you through the options that are available.
- Repayment Plan – Entering into a formal repayment plan, will allow a business to address all of their creditors in one affordable monthly repayment, whilst also allowing the business to trade, and protecting them from further creditor pressure.
- Closing the company down – The company could be at a point where the debts involved are so severe, that the chance of recovery are too difficult. It may come to the point where you can no longer pay your creditors back and need to close the company down.
As the Furlough scheme is set to end in September. It’s important to have a plan as to how you may be able to continue paying staff. It may not always be possible to keep all of your staff on and some may have to face redundancy, just as long as you follow the correct process. There are ulterior finance options you can use, if you believe that you still need the staff as your business continues to grow. However, if the business doesn’t have a strong chance of survival and you’re facing creditor pressure, you may need to look towards liquidation.
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