Staff: a company’s greatest asset or a potential liability?
As the UK edges towards the end of lockdown restrictions, we are looking at some of the practical issues that could impact SMEs in their attempts to structure their staff requirements for “the new normal”.
We are not about to give HR advice (we have our own specialist advisors that can help navigate HR issues for clients), but we will focus on some key areas that could represent an unforeseen and serious financial threat to an SME, particularly if those areas are mis-handled or overlooked.
Staff Cuts
Not all SMEs will be able to bring their entire workforce back and will have to contemplate staff cuts. Redundancy costs alone can amount to a significant one-off expense for a business already suffering the financial impact of the pandemic, but those costs can be exacerbated if correct procedures are not followed.
SMEs can face additional costs if the requirement to consult with a workforce is not dealt with and results in protective awards claims. The selection process for redundancy is also a very sensitive area and SMEs need to protect against subsequent claims for unfair dismissal.
Furlough and the Return to Work
The furlough scheme has helped SMEs retain workers who might otherwise have lost their jobs during the pandemic. However, the end of the furlough scheme in September is now in sight and not all businesses will be back to full strength by then or may be looking to bring a reduced workforce back.
For SME owners who need more time to build their businesses back up, the withdrawal of support for workers wages will mean increased staff costs from 1 October onwards or the prospect of having to find the money to make redundancies.
For those staff returning after long term furlough, they may well have accumulated significant holiday entitlements if the employer has not already insisted that holiday should be taken. This may prove a headache for the SME owner if staff want to take their holiday as lockdown eases just as the business is trying to get back to stability.
Many businesses are now reporting difficulties in getting staff to return to work, particularly in offices where the staff member has been able to work from home. Whether it is resistance to return to an office environment in favour of home working or anxiety about the health and contamination concerns of an employee returning, business owners face spending valuable management time in resolving these sensitive issues or risk the prospect of Employment Tribunal claims.
Challenges for the SME Business Owner
Although the end of lockdown is on the horizon, the problems for SMEs are far from over.
The numerous issues concerning staff are amongst the myriad of challenges faced by SMEs in the attempts to stabilise and build businesses back up.
These staff issues could have a serious financial impact on a business and in some cases, might threaten the future viability and solvency of a business as it grapples with other debts accumulated during lockdown.
The chances are that any support loans obtained a year ago have long been utilised and the SME has to fund staff solutions from resources already depleted from supporting the business for such a long period.
If your clients are in this position and would like to discuss their duties and obligations and their options where a business is under financial threat from these problems, the team at Poppleton & Appleby have a wealth of experience they can draw on. For help or advice, please contact Matt, Andy or anybody from the team who will be able to guide you and your clients through the issues raised in this article.
