NEWS
08/01/2021 06:34 GMT | Updated 08/01/2021 09:33 GMT

Firms Forced To Sack Workers As Government Leaves Them Out Of Furlough Scheme

Anger as new staff employed after October 30 are excluded from financial support.

Firms are being forced to sack staff as a strict government cut-off date has left many excluded from the furlough scheme.

Workers who began new roles at the end of last year are unable to claim furloughed income if they were not on the payroll by October 30.

It means any individual who began new work or changed jobs after this date is ineligible for support and may only be left to survive on the Universal Credit benefit, meaning some are struggling to “stay afloat”.

Employees need to have been paid, and the HMRC notified of the payment of earnings, by the cut-off date of October 30, 2020, in order to qualify.

The TUC, which represents trade unions, said Rishi Sunak’s furlough programme was “increasingly inadequate” and urged the chancellor to examine more generous schemes in France and Germany.

Sean Spurr, who runs a book dealership, hired two full-time staff members after the cut-off point and now faces having to make them both redundant.

He told HuffPost UK he increasingly believed the cut-off was “deliberate callousness by the Treasury to try to lower their costs” in a move that will “sabotage the ability for the economy to bounce back”.

SIPA USA/PA Images
Closed shops and cafes in Covent Garden, London

He told HuffPost UK: “Both are full-time staff whose job involves driving to charity shops and purchasing books. Currently they’re both doing a job that isn’t usually theirs in the office processing stock that has been bought, but this is likely to run out by the end of the month.

“The company, and myself personally, don’t have savings that we could personally cover wages from when there’s no work – the company was just myself 18 months ago and we’ve invested all money we’ve made into expanding and I’m personally in overdraft. All other staff members are on furlough as they did meet the deadline.

“We’ve obviously spent time and money training these employees, they’ve become part of the team, and I really don’t want to lose them so we’re going to try to find work for them, but what we do as a company is currently impossible due to the lockdown and it doesn’t seem realistic that we can create an entire new business model within a few weeks to pay their wages.”

Leanne, who asked not to give her surname, was made redundant from her hotel management job in October. The 29-year-old, who lives in north Yorkshire, took a new job in retail which began on December 10, but due to the national lockdown is neither able to attend, nor qualify for furlough. 

She said: “I have slipped through the cracks this time but I’m fortunate enough to be able to stay afloat on my husband’s wage – but that’s all we are doing, staying afloat.” 

Caoimhin Toland, 22, had been working in retail in London for three years when he applied for a transfer to Leeds in August. He said: “However due to Covid-19 this was suspended so I had to leave the company only to be rehired after the next cut-off point. 

“For the November lockdown, understandably I was put on paid leave. However, now three months later I have again been put on unpaid leave due to the eligibility date. I have had to apply for Universal Credit to cover living costs for this month due to the loss of that income.”

The government has extended the furlough scheme with each new lockdown, with this one set to run until the end of April. But it is not clear what will become of those workers who fail to meet the eligibility criteria for the payments – amounting to 80% towards wages of unworked hours.

A petition urging the government to extend the furlough support scheme to include new hires after 30 October has reached more than 2,000 signatures.

Spurr added: “Both of the staff members live with their partners too, meaning that their Universal Credit entitlement would be significantly lower than furlough and might not be enough to live off.

“I’ve told them I’ll try my best to find other work to do, but to also apply for any other jobs and they can take time off for interviews. As soon as shops reopen their jobs are viable, and if they leave us we’ll have to hire replacements, but with lockdown potentially lasting several months if we paid salaries without work we’d run out of money to continue as a business when things reopen putting more people out of work.

“I’d guess this is causing thousands of unnecessary redundancies, particularly in retail and hospitality sectors and businesses that support or rely on these sectors such as ours.”

He added: “I was hoping that the lack of an extension of eligibility was just an oversight, however as the days pass I’m increasingly believing that it might be deliberate callousness by the Treasury to try to lower their costs, but in doing so will sabotage the ability for the economy to bounce back as we come out of lockdown as most of these businesses will need to take back on staff they’ve made redundant but will have to go through the costs of training and hiring new employees. Obviously also this would have a massive impact on staff members let go.”

Tim Sharp, an employment rights policy officer at the TUC, said: “At the last cut off point, ministers were perhaps optimistic about the direction of the pandemic and the direction of the economy. It’s clear now that this is dragging on and the government needs to take steps to make sure that support systems like this meet the needs.

“So that certainly means looking again at the cut-off date to ensure that all those workers who need support can receive it and we need a far longer term arrangement for the furlough scheme in general – at the moment it’s been extended to the April 30, that’s clearly looking increasingly inadequate, particularly when you look at what other countries have done – France has put in a two year plan, Germany’s runs til the end of the year.

“The government needs to look overseas and take some lessons.”

A spokesperson for the HMRC told HuffPost UK the eligibility date had been set in order to deter fraudulent claims being made by people creating new PAYE schemes to claim with no data for HMRC to compare it with.