One in four employers expect to make redundancies as a result of coronavirus, poll finds

Experts urge firms to only make permanent layoffs as a ‘last resort’ and warn staff can still bring tribunal claims if companies do not handle these situations properly

One in four UK employers expect to make permanent redundancies because of the coronavirus crisis, while more than half will furlough staff, according to a People Management and CIPD survey. 

To understand how HR teams have been adapting their response to the coronavirus outbreak, People Management and the CIPD have been polling employers over the last few weeks. 

The third and latest poll, which surveyed more than 300 employers, found 52 per cent of employers planned to temporarily lay off staff through the government’s job retention scheme.

Of those who predicted they would furlough staff, nearly one in five (17 per cent) said they anticipated having to furlough up to 10 per cent of their workforce, while 10 per cent forecasted having to temporarily lay off up to 24 per cent of the workforce. 

The survey also found that, despite government intervention, a quarter (25 per cent) of employers expected to make at least some permanent redundancies. Nearly one in six (15 per cent) expected to make up to 10 per cent of their existing workforce redundant, 9 per cent anticipated having to lose up to 49 per cent, and 1 per cent more than 75 per cent.

Other options beyond the furlough scheme and redundancies cited in the survey included asking staff to take annual leave (cited by 35 per cent of respondents), temporarily deploying employees to other parts of the business (26 per cent), reducing people’s hours (25 per cent) and freezing or deferring pay rises (24 per cent).

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The poll also found hiring was expected to take a hit over the coming months. More than half (52 per cent) said all recruitment had been frozen at their organisation, and a quarter (25 per cent) said they would hire fewer new staff than normal. Meanwhile, one in seven (14 per cent) said hiring would continue as normal, and 4 per cent said they intended to recruit more staff to cope with increased demand.

Ben Willmott, head of public policy at the CIPD, said the research showed many businesses were already considering redundancies, rather than utilising the government's job retention scheme.

“Making redundancies should be a last resort once all other options for reducing workforce costs have been taken,” Willmott said. “Organisations that are most successful in protecting jobs and supporting their employees will also be those that are most resilient and best able to recover once this crisis is past.”

But Paul Holcroft, associate director at Croner, said it came as no surprise that a number of businesses felt they had no other choice but to make staff redundant in these uncertain times. He warned employers to remember that usual rules surrounding redundancy continued to apply and, in the absence of further guidance from the government, have not been relaxed. 

“Employees can still seek to bring tribunal claims if their employers do not handle these situations properly – a process that is likely to drag on for an extended period because of the outbreak,” Holcroft said. 

He added that businesses should “weigh up all their options carefully” to avoid issues arising at a later date, and potentially retain staff they otherwise would not want to lose. 

Jude Read, managing director of Jude Read Consultancy, told People Management the furlough scheme had been a “godsend” for her clients, the majority of which would not have been able to cope without it. Read said many had been negatively affected by the outbreak and that she suspected there would have been a significant number of redundancies without the government’s scheme. 

“We’re not just talking about five or six employees being furloughed – we’re talking about 20 to 50 workers being furloughed at one time,” Read said. “Can you imagine if this was redundancy and having to handle a collective consultation as well?” 

In a separate survey by the British Chambers of Commerce, 44 per cent of 600 respondents said they expected to furlough at least half of their workforce in the coming weeks. Nearly a third (32 per cent) said they were planning to furlough between 75 and 100 per cent of their workforce. 

However, money from the job retention scheme is not expected to start arriving until the end of April at the earliest, and both Read and Sarah Dowzell, chief operating officer and co-founder of Natural HR, said many employers did not have the cash upfront to bridge this gap.

Redundancies would be “sadly unavoidable” for businesses that are struggling, said Dowzell. But she warned employers needing to make difficult decisions to handle the process with the utmost care and empathy. 

“How you behave and treat your employees – both those being made redundant and those unaffected – during this time of crisis can have a huge impact on the perception of your company once you’re out the other side,” she said.

“Handling it without the due care and attention such a situation deserves will not only make an already stressful time for your employees that much more difficult, but it could also adversely affect how your business is viewed externally and your ability to attract future talent.”