Freedom day warning: Furlough & Brexit pressures to raise redundancy risks

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Freedom day relaxations are expected to have a dramatic impact on the economy but unfortunately, not all of these changes will be beneficial. New research shows rising costs could make life difficult for employers and their workers, which may be made worse as the furlough scheme ends.

Equals Money, the payment solutions and expense management company, recently conducted a survey of 1,050 SME leaders in the UK.

Today, the results of this survey were released and it showed many expected costs to rise over the coming weeks, putting the economy under increased pressure.

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Equals Money detailed leaders of the UK’s SMEs are bracing themselves financially for lockdown easing with around a third expecting the cost of salaries (37 percent), expenses (32 percent), office supplies (30 percent) and IT equipment (30 percent) to increase.

Ian Strafford-taylor, the Chief Executive Officer of Equals Money, expanded further on this research.

READ MORE: Pension: UK schemes may not generate ‘sufficient income’ for EU visas

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Additionally, continued Brexit uncertainty may add to these woes.

Equals Money explained SMEs will need to contend with a shifting international economic landscape.

It detailed since the Brexit deal came into effect in January, three quarters (76 percent) said foreign suppliers have increased prices, and a third (33 percent) cite an increase of more than 10 percent.

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Mr Strafford-taylor concluded: “Leaders of the UK’s SMEs have had to be extremely resilient over the last year, with lockdowns and Brexit impacting cash flow.

“The key to a healthy cash flow is the ability to plan and predict spending, and that insight comes from pre-existing spending data. For SMEs, having expense management systems and currency trading advice is key to keeping costs as low, and predictable, as possible.”

These difficulties and raised costs may force employers to make difficult decisions over the coming weeks as Government support ends.

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The furlough scheme, which has kept millions afloat, will end on September 30 and many experts fear a wave of redundancies could be on the horizon as businesses struggle with keeping staff on.

Laura Kearsley, a partner and solicitor specialising in employment law at Nelsons, warned employers may be forced to plan for redundancies now.

Ms Kearsley explained: “Faced with uncertain trading times for many businesses and now partial financial responsibility for all employees, many employers will need to review their workforce and requirements to consider whether current levels of staffing are sustainable.

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“If an employer intends to make more than 20 people redundant, this triggers collective consultation requirements, including minimum consultation periods during which redundancy dismissals cannot take effect. The consultation period for employers who anticipate making 100 or more people redundant is 45 days and for those anticipating making between 20 and 99 redundancies it is 30.

“For employers who are concerned about the changes to the furlough scheme, they need to think carefully about whether they want to commence redundancy consultations now so that they are in a position to make redundancies before the government funding reduces – rather than waiting until that point to start consultation and being faced with employment costs during the consultation period.

“As well as complying with the requirements of collective consultations (which include liaising with recognised trade unions or elected employee representatives), employers that are making any number of employees with more than two years’ continuous service redundant will need to adhere to minimum requirements in terms of consultation and meetings – this could be challenging in the coronavirus lockdown.

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“We cannot emphasise enough the importance of planning ahead wherever possible, particularly now employers have a much clearer idea of what their contributions to employees need to be and when the CJRS [Coronavirus Job Retention Scheme] will end.”

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