With 2020 nearing its close, in this article we reflect on the challenge’s businesses have faced in 2020 and consider what we can do to plan for the year ahead. We know that we will start 2021 still working in a Covid-19 secure way, but we will also see the UK move out of the Brexit transition period and therefore start seeing the changes that Brexit will bring to the UK.
2020 Reflection
It is fair to say that 2020 has been the most challenging year, for business and employees. We have seen uncertainty and turmoil in dealing with a pandemic.
According the Office for National Statistics, unemployment has risen to 4.8% for the period July to September. This is 0.9% higher than a year ago and 0.7% higher than the previous quarter April to June. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/november2020
Redundancies have increased by 181,000 for the period July to September, which is a record high and we have seen an increase in the number of businesses going into insolvency. According to the Government’s Insolvency Service, England and Wales had 856 insolvencies in October. This is a significant number; however, it could have been significantly greater, since it is a decline compared to the same period in 2019. This might seem strange, but it is believed that this reduction in company insolvencies is likely, in part, because of the financial support packages that the Government introduced to support businesses in responding to Covid-19.
We have also had to deal with the news that was confirmed in August that the UK’s economy shrank by 20.4% between April and June compared to January to March, meaning the UK is officially in a recession.
2021 Progressing Forward
For these reasons, businesses will need to re-build to not just remain in operation, but to become stronger and be able to continue to respond to the pandemic. A crucial part of doing so, will be to plan for the year ahead.
We know that 2021 will begin still working in a Covid-19 secure way, and we will also see the end of the Brexit transition period which will bring changes for the UK from 1 January. Planning is going to be vital to success. But there is light at the end of the tunnel with the welcomed news of a vaccine that is going to be rolled out from early December over the coming months.
Financial Support
We have seen the Government provide financial support to businesses since March 2020 and this will continue into 2021. It is important to consider how you can best utilise funding available to help your business continue operating. Here is a summary of the various options, for which you can read the full detail in the Governments guidance page. https://www.gov.uk/government/collections/financial-support-for-businesses-during-coronavirus-covid-19
Paying Employees
Coronavirus Job Retention Scheme (CJRS)
The CJRS continues to be in place until the end of March 2021. At present, the Government are paying 80% of normal wages (capped at £2,500 per month) with employers paying only the cost of national insurance and pension contributions. We are expecting the Government to review the scheme in January, at which point, they may announce that employers are to contribute towards the scheme, as was previously the case back in September/October. However, this will depend on the economic circumstances of the UK.
Statutory Sick Pay
Whilst there is a vaccine, and many others continue to be in development stage, we must accept that we will still be living with Covid-19 for many more months to come. It is important to be prepared for continued covid-19 related absence and self-isolation requirements.
If an employee cannot work because of Covid-19 they may be entitled to SSP if; they or somebody they live with has coronavirus symptoms or tested positive, they have been told to self-isolate by Test and Trace, somebody in their support bubble has tested positive or they have been advised by a Doctor or healthcare professional to do so before going into hospital for surgery or a procedure.
They may also be eligible for SSP if they live or work in an area with restrictions in place including advice to shield and they have been advised to shield because they are at very high risk of severe illness from Coronavirus.
Adult Social Care Infection Control Fund
This fund is specific to those businesses operating in adult social care by helping to reduce the need for staff movements between sites. It is available to both those operating in residential settings as well as community care settings and can include those who do not have a contract with local authority.
The Government expects the grant to be fully spent on infection control measures, for which they have defined and will be in place until 31 March 2021. One example of how the grant could be used is to ensure that staff who are isolating in line with government advice receive their normal wages and do not lose income whilst doing so. For instance, the grant could be used to uplift the pay of staff who are self-isolating and who ordinarily would have only received SSP. You can read more about this scheme in the Government’s “Adult Social Care Infection Control Fund – round 2 guidance. https://www.gov.uk/government/publications/adult-social-care-infection-control-fund-round-2/adult-social-care-infection-control-fund-round-2-guidance
Business Loans, Grants and Financial Relief
Coronavirus Bounce Back Loan
This loan is for small and medium sized businesses to enable them to borrow funds quickly, with the maximum amount being £50,000. Fees and interest will not need to be repaid for the first 12 months, but when interest is paid, it is set at 2.5%. This scheme is open for applications until 31 January 2021.
Coronavirus Business Interruption Loan Scheme
This scheme helps small and medium sized businesses to access loans for either up to 3 or 6 years (depending on the type of finance applied for). This scheme is open for applications until 31 January 2021.
Coronavirus Future Fund
This scheme is to make available government convertible loans between £125,000 and £5 million to innovative companies and are subject to at least equal match funding from private investors. It may be an option for those businesses relying on equity investment and who are unable to access other government business support programmes because they are either pre revenue or pre profit. This scheme is open to applications until 31 January 2021.
More Ideas on Financial Relief
For more ideas on financial relief and helping your business to succeed in 2021, read the full article by HR Solutions at https://www.hrsolutions-uk.com/2021-planning-for-the-year-ahead/ which will cover the following topics in more detail:
· Business Rates Relief
· Local Restriction Support Grant - Closed (for nightclub, dance hall or adult entertainment businesses)
Local Restrictions Support Grant – Open (for businesses operating in Tier 2 or Tier 3)
Local Restrictions Support Grant – Closed (for businesses operating in Tier 2 or Tier 3)
Additional Restrictions Grant
· VAT deferral new payment scheme.
Resource Options for 2021
Planning your structure and your resource needed for 2021 is going to be vital. Now is the time, if you have not already done so, to look at whether your business is structured appropriately to face the continued challenges ahead.
It is also hoped at this time that staff attrition is avoided or kept to a minimum, especially for those businesses who rely heavily on the recruitment of EU nationals, such as the care sector and hospitality since the rules on recruiting are changing.
Help Your Business to Succeed in 2021
For ideas on how you can ensure you have the right resource in the right place to help your business succeed in 2021, read the full article by HR Solutions at https://www.hrsolutions-uk.com/2021-planning-for-the-year-ahead/ which will cover the following topics in more detail:
· Restructuring and Redundancy
· Apprenticeships and the Kickstart Scheme
· Flexible Working
· 4 Day Work Week
· Ensuring you use the Best Type of Contract for new Recruits
· The Impact of Brexit on Your Existing Workforce
· The Impact of Brexit on Your 2021 Resource Requirements
· 2021 Action Plan and Things to Consider including:
o Reviewing Your Organisation Structure
o Developing a People Plan
o Implementing a Change Management Programme.
Further HR Guidance
· Webinar Recording: you can watch the HR Solutions webinar called ‘2021 Planning for the Year Ahead’, on demand at https://www.hrsolutions-uk.com/services/2021-planning-for-year-ahead/.
· HR Knowledge Base: as part of your PRCA membership you can get access to the HR Knowledge Base, which is the go-to resource for thousands of business owners and managers across the UK. The HR Knowledge Base includes HR documents, templates, legal updates, news and hot topic articles as well as access to free webinars and HR seminars. To find out more call 0844 324 5840 or visit www.hrsolutions-uk.com/members-prca.