May 1, 2020
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Retail bosses seek clarity on furlough scheme over job loss fears

May 1, 2020

As pressure grows on the British government to share its lockdown exit plans, retail bosses are also seeking clarity over what will happen to the Job Retention Scheme (JRS), under which furloughed staff salaries are being paid by the state.

Retail bosses are worried about what might happen when store reopen if business is slow to pick up - Next

There are major concerns that the scheme could end abruptly as soon as non-essential shops are allowed to open. With consumers remaining extremely cautious – both about the coronavirus and their personal finances – it's unlikely that a fast return to physical retail as normal will happen. This means the withdrawal of government financial support could present an existential problem for some smaller businesses. Craig Beaumont at the Federation of Small Businesses said a “cold stop” to the JRS would be a disaster.

And Dame Carolyn Fairbairn, director-general of the CBI told The Times: “Some support systems will need to stay in place. One of the most interesting next steps on the job retention scheme is how it becomes more flexible [with either] tapered furloughing or partial furloughing.”

While many of the UK's largest retailers are well capitalised, their CEOs are nonetheless concerned about the potential ending of the JRS and the bosses of both Next and Dixons Carphone have called for information on what the government’s planning.

Next chief Lord Wolfson and Dixons Carphone boss Alex Baldock (who formerly ran Shop Direct/Very) have said that any abrupt ending of the scheme that’s due to finish on June 30 could threaten thousands of jobs.

Once stores are allowed to open, it's likely that strong social distancing measures will still be in place with limited numbers of shoppers allowed inside at any one time and potentially fewer staff required in the shops.

The Times reported that the Treasury is considering plans to introduce a flexible furlough scheme as the CBI has called for so that companies could bring workers back part-time with furlough financial support continuing.

The newspaper also cited employment lawyers warning that some businesses would have to start large redundancy programmes within weeks of reopening if the Job Retention Scheme isn't extended beyond June 30. The scheme is currently paying the wages of around 4 million people.

One of the problems is that businesses laying off more than 100 employees have to put in place a 45-day consultation period. If those employees aren't unionised and have to appoint their own representatives, that consultation period could take even longer. It means that if the JRS did finish at the end of June, companies would be making layoffs in early July but would have to start the process during May.

Tory peer Lord Wolfson has praised the prompt action of the Government in implementing both the scheme and other business support measures, but he said that within the next three or four weeks, businesses would need clarity about what happens from July 1.

He said: “Our view is, wait and see. We don’t need to make any decisions now about staffing levels. We’ll get the shops open, see what levels of demand there are. It will take two or three weeks for us to get to the point where we’re sure [about staffing levels]. Once furlough finishes I think we will see more companies shedding people.”

Baldock meanwhile told the newspaper: “We are starting to raise our gaze beyond this crisis to how things might be different. In short, we would support a tapering of government relief rather than just ending on a cliff edge.”

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