The coronavirus pandemic is undermining many recruitment businesses, placing particular strain on those recruiting into sectors that have been hardest hit by the country-wide lockdown, such as retail, charities, travel, leisure and hospitality to name but a few.
We have summarised the practical steps that recruitment businesses should look to take to mitigate the issues, together with the measures currently outlined by the Government to support businesses at this time.
Job retention scheme
We’re aware that some companies have either laid off employees already or given staff redundancy termination notices due to the pandemic. Employment legal advice is needed to successfully re-position staff but under the job retention scheme, you can re-hire and furlough staff made redundant since 28 February 2020.
Further details about the scheme and how to apply furlough arrangements are explained here.
Some points to highlight are:
- The scheme applies to any worker on your PAYE payroll AS AT 28 February 2020 including agency staff and those on zero-hour contracts.
- This could therefore include agency staff on the payroll of an umbrella business although funding until the grant is received and the point below regarding bonuses may present difficulties.
- Employers can claim for 80 per cent of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated employer National Insurance Contributions and minimum automatic enrolment employer pension contributions on that wage. The scheme has now been changed to cover contractual commission payments for employees on variable pay which is significant for the sector’s workforce.
- The employee can not undertake any work whilst furloughed.
Managing your people during coronavirus
For those who can work from home, maintaining communication and transparency will be key in keeping your work force motivated and engaged. Our practical advice on how to manage your staff through these uncertain times can be found here.
Managing off-payroll workers
For off-payroll workers, the Government has postponed proposed amendments to its IR35 reforms until April 2021. The delay has bought many firms precious time to focus on the short-term workforce challenges ahead.
Suspending payment of employment taxes and other payroll related issues
Managing to account for tax and national insurance to HMRC could be challenging at times like these. You can find details of who to speak to on this and answers to all the frequency asked questions covering employment related information here.
HMRC have confirmed that no VAT payments are required until 30 June 2020 and taxpayers have until 31 March 2021 to pay any liabilities that have accumulated during the period. Find out more here.
Statutory Sick Pay (SSP)
SMEs can reclaim the SSP paid for sickness absences due to the coronavirus which are available from day one. Find out more here.
Cash flow management, invoice finance and Coronavirus Business Interruption Loan (CBILS)
With significant uncertainty for recruitment businesses, in many cases the only known for management teams is the current cash position of the business. Noting many businesses will effectively be mothballed for the next three months with many of their employees furloughed it is important that businesses manage their cash to ensure they are in a position to re-commence trading when normal life and business resumes. We have summarised some key points regarding general cash flow management here.
By fully understanding their cash flow, recruitment businesses will be able to assess their available options, including:
- Assessing the continued availability of invoice finance: Many temporary and contract recruiters rely on invoice finance to fund working capital but a reduction in revenue could present significant funding problems, such as breaching facility conditions. We have therefore set out five actions to consider here.
- Supporting any funding applications for CBILS: This is only available to employers who meet certain criteria and whilst the accredited lenders are doing what they can to accelerate and make the application process smooth, it is clear is that the lending is currently not necessarily easy to access. It therefore requires considerable supporting information and explanations, some of which may prove challenging to prepare. We have set out more information on CBILS and how we can help here.
Considerations for a globally mobile workforce
The impact of coronavirus is particularly poignant for employers with globally mobile workforces, for which there are many aspects to consider. Find out more here.
IT and digital strategy
Current working practices have highlighted the importance of technology and the reliance on the workforce, customers and prospects being able to digitally interact with businesses. We can help you enhance and implement change with respect to your IT and digital strategy. Find out more here.
For more advice for your recruitment business amidst the coronavirus crisis, please contact Neil Thomas.