What happens after furlough? A Covid story
In May 2020, 7.5 million jobs were furloughed in the UK. My good friend Bhavesh’s job was one of them.
Bhavesh works for a small IT company in London. He is less than impressed by the lack of communication from his line managers, the CEO and HR. He says he feels as if he’s “sitting in limbo” trying to make ends meet and keep himself occupied. Sound familiar? Perhaps you are in a more fortunate position and are now working. Alas, not my friend.
The original letter from his employer explaining the Coronavirus job retention scheme (the official title, but we will call it the furlough scheme from now on) didn’t include an end date. However, Rishi Sunak, Chancellor of the Exchequer, has since announced that the scheme will end on 31 October 2020.
By the way, the furlough scheme is now closed to new entrants. You will not be considered a new entrant if your employer has put you on the scheme at least once before the 10th of June 2020. Employers can put someone on furlough for the first time if they’ve returned to work after 10 June 2020 from parental leave e.g. maternity, adoption; parental bereavement leave, or service as a military reservist.
Furlough scheme explained in brief: The government has allowed employers to put some or all of their employees including; agency workers, apprentices, those on zero-hour contracts on temporary leave (furlough) with reduced pay. Further details here)
Bhavesh sees people leaving his company for new jobs, but has heard nothing from his employer about plans to attract new business or retain contracts from the pre-COVID 19 era. It’s no surprise that on a hot sunny day, whilst we were relaxing in my garden, he asked me the following questions:
“Can they make me redundant?” I tell him yes. it’s a real possibility. This is despite the Chancellor’s £1000 bonus, for businesses, per furloughed employee who is brought back to work and continuously employed through to January 2021. Additional conditions apply but this is the gist of the job retention incentive programme for employers.
My friend can be made redundant during the furlough period or at the end of the scheme. On 30th July new laws were introduced that mean furloughed workers, who lose their jobs, will be eligible to receive redundancy pay based on their normal pay unless they have a more favourable company redundancy policy in place.
Unfortunately, as Bhavesh has been at his current employer for less than two years (i.e. the qualifying period for statutory redundancy pay), he would receive his contractual notice period only (unless his employer wishes to be generous and give him an ex-gratia payment, but that seems unlikely given we’re in a recession.)
Perhaps he’s being pessimistic? He’s only 52, qualified, articulate and has lots of great experience under his belt. Sadly, we know too well that it can be difficult for us baby boomers/ generation X folks. In the last three years, my friend has been in employment as much as he has been out of it. That said, of course, all could end well. His employer may win new business and retain existing customers. I really hope that they are able to welcome him back with open arms!
“What happens if they want me to return to work at the end of the scheme?” I say jump for joy and return (even if that means walking upstairs to your home office space!). Wait a moment because it just might not be that straightforward. Many businesses are struggling and it’s possible that his employer will want to negotiate new terms of employment e.g. reduced hours/ pay.
I told Bhavesh that his employer must consult with him about the reasons for any proposed contractual change and he should ask about future review periods e.g. under what conditions could the hours/ pay be increased in the future. They need to reach an agreement and ensure everything is put in writing. However, in such times, Bhavesh said he would be grateful for anything that pays more than being on the dole. Having been there, I understand totally.
“Should I look for another job?” I tell him "YES YES and YES! " He has nothing to lose and everything to gain.
I’m always telling him to look at the Civil Service jobs website and his local council’s job site. The pay may be lower compared with an equivalent private sector role but the pension scheme is very competitive. Plus, I tell him to speak to his friends/network and let them know he’s looking too as well as updating his LinkedIn profile and searching on specialist job sites.
I asked Bhavesh if he would consider returning to being self-employed and set up another company. However, he needs to know that he has a regular income as his personal circumstances have changed (i.e. he no longer has savings to fall back on during the quiet times).
“Can I take out my pension?” I tell him "I’m not a pensions expert and can't give advice", but I am able to say that at age 52 he’s too young to claim his state pension, he'll have to wait at least another 15 years for that. Bhavesh has to wait until he’s at least 55 years old to be able to make any claim against his private pension pots.
The only good thing to come out of that conversation was that he is going to make an appointment (free) with Pension Wise to understand his options– see further details here
In the meantime, I’m enjoying the fact that Bhavesh my friend and neighbour, who normally enjoys sitting in my garden munching on BBQ plant-based burgers and glugging Cobra beer, has finally agreed that we should help each other tidy and maintain our 100-foot gardens. We’ve taken nearly 20 bags of garden waste to the local dump already and we’re not finished yet!
I do wonder how I can have the best of both worlds… my friend productively employed and content yet still willing to share the gardening … many hands make light work, after all. 😀