Rethinking the future of the workforce
As the economy looks to reopen and the Government’s updated support packages come into force, business leaders are rethinking the future of their workforce, writes Gary Hanson, Audit Partner at BDO Cambridge.
BDO’s latest monthly Rethinking the Economy poll of 500 mid-sized businesses leaders shows that, with so much to consider and implement, only one third of businesses placed “adapting my business for Brexit” as their top immediate concern and instead are focused on making loan repayments (37 per cent) and managing redundancies (36 per cent).
More locally, our surveys have indicated that East Anglia’s mid-market businesses are bouncing back following the disruption, with 27 per cent of businesses owners claiming to be succeeding in the post-pandemic economy which most will admit is still burgeoning.
Business leaders in East Anglia appear to have moved quickly to adapt to the new reality:-
- 37 per cent of businesses have improved automation
- 23 per cent have invested more in operations
- 23 per cent have allowed more flexible working
- 20 per cent have put investment plans on hold
Read BDO’s full Rethinking the Regions analysis for a regional snapshot of businesses’ priorities at www.bdo.co.uk/rethinking-the-regions
One of the biggest challenges facing many businesses has been the speed at which they could adapt, with agility in decision-making and ability to drive changes being two key factors.
Many businesses have started to transform the way they do business by revisiting operations, identifying efficiencies, adapting product lines and finding new ways of working.
As has always been the case, economic downturns are accelerators for change. The most resilient businesses are those that have adapted already, with many reporting benefits and accelerated growth.
A priority for many businesses is how to retain a resilient workforce and look beyond the immediate future to a hopefully prosperous and successful 2021.
Protecting jobs, and cash, through the winter
In a previous survey, less than 10 per cent of businesses stated that they have no plans for any job cuts throughout the winter months. In order to combat this, the Chancellor unveiled the Government’s Winter Economy Plan last month to protect jobs and support employment following the end of the Coronavirus Job Retention Scheme (CJRS).
The new Job Support Scheme (JSS) will operate for six months from November 1 to April 30, 2021.
The JSS will be open to all employers with a UK PAYE scheme and bank account but, to be eligible, large companies must be able to prove that they are still suffering a significant drop in turnover because of the pandemic.
It is a stand-alone scheme and there is no requirement for the employer or employee to have participated in the CJRS.
All employers can claim under both the JSS and the Job Retention Bonus Scheme and as this is a new scheme, all employees on the payroll at 23 September 2020 can qualify for JSS.
The subsidy from the Government will be up to 33 per cent of the employee’s usual wages for the contractual hours not worked during the claim period.
Employers will be required to match this payment in percentage terms as well as pay employers’ NIC and pension contributions on the total salary payment. In total, this will guarantee employees a minimum income of 77 per cent of their normal earnings during the claim period.
The Chancellor also announced:-
- Changes to the Bounce Back Loan and Coronavirus Business Interruption Loan schemes, including extended repayment terms and application deadlines
- The option for taxpayers that deferred VAT payments between 20 March 2020 and 30 June 2020 to spread their payments over 11 interest free payments in the financial year 2021-2022; and
- Extension of the temporary reduced rate of VAT (5%) to 31 March 2021 for the hospitality and tourism sector.
Maintaining a focus on risk
Our focus is to ensure organisations are resilient for what the immediate future may bring, but also that they have assessed their ongoing risk. The CJRS was implemented in a very short timeframe and the mechanism for claiming was very complex.
Understandably, many businesses focused on cash flow and securing a grant rather than the detail of their claim.
HMRC is now starting to review claims to ensure they were accurate and is pursuing the large number of CJRS claims thought to be incorrect or fraudulent. It has also introduced a penalty regime that will apply where corrections to a claim have not been made in the allowable period (the later of 90 days from the claim or 20 October 2020).
Now is the time to consider whether the process you used to make your claim is accurate – BDO can support you with our CJRS Process Risk Review Tool.
Do get in touch with me if you would like to discuss your risk exposure. Aspects to consider include payroll frequency, salary sacrifice arrangements, types of employees and flexi-furlough claims to help you decide whether any further action is required or alternatively give you the peace of mind that your claim was correct.
• Gary Hanson is available on 01223 535000 or 01223 266350 or via email: gary.hanson [at] bdo.co.uk