NICHE FEATURE
Can’t afford to pay staff
now furlough has ended? The Coronavirus Job Retention Scheme (CJRS), or furlough, came to an end on September 30, 2021 after several extensions of the supportive government coronavirus initiative by the Chancellor. Carolynn Best, Partner at Begbies Traynor tells us more
T
he scheme has protected thousands of jobs since the start of the pandemic, and helped to prop up the economy in unprecedented conditions. Now that we’ve emerged from lockdown as a nation, however, businesses are being forced to consider whether they can continue with the same staffing levels, or if they’ll have to take action. Businesses that find the additional costs are too much may be forced into liquidation, so if you’re one of the many still experiencing financial difficulty due to the pandemic, what can you do if you can’t afford to pay staff now that furlough has finished?
SUPPORT FOR BUSINESSES AFTER FURLOUGH
Even though furlough has ended, there are other schemes and reliefs in existence that could stabilise your finances and help you to pay your staff. These include, but are not limited to:
The Recovery Loan Scheme
The Recovery Loan Scheme is open to new applications until December 31, 2021. It’s available for businesses of all sizes that need additional funding to
grow following coronavirus, and offers a range of different methods of funding. These include invoice finance, asset finance, overdrafts, and term loans.
Pay As You Grow (PAYG)
If you already have a Bounce Back Loan, Pay As You Grow can help you spread the instalments over ten years rather than six years if your lender is agreeable. You may also be able to make interest-only payments for six months, or take a six-month payment holiday.
WHAT IF YOU STILL CAN’T AFFORD TO PAY YOUR STAFF AFTER FURLOUGH?
Redundancies If your business needs to make staff redundant in order to survive, it’s important to make sure the selection and redundancy processes are fair, so you aren’t at risk of unfair dismissal claims at a later stage. You also need to factor the cost of holiday pay into your redundancy payments. Staff who have been on furlough are entitled to arrears of holiday pay if they’re made redundant by their employer. If members of staff have been furloughed for an extended time, this holiday
IF YOUR COMPANY’S FINANCIAL DIFFICULTIES ARE IRREVERSIBLE, ENTERING VOLUNTARY LIQUIDATION PROTECTS YOUR CREDITORS’
pay could represent a significant sum in addition to their statutory redundancy payout.
Company Voluntary Arrangement (CVA)
A Company Voluntary Arrangement (CVA) is a formal restructuring of your business debts. It could be an option if the company is sufficiently stable to continue trading in the long term. Essentially, the purpose of a CVA is to help viable companies trade their way out of difficulty. The company repays creditors an affordable monthly sum that is legally binding within the agreement. This arrangement can also help creditor businesses, as it means they retain a trading relationship that may have simply faltered temporarily.
Creditors’ Voluntary Liquidation (CVL)
If your company’s financial difficulties are irreversible, entering voluntary liquidation protects your creditors’ interests and enables you to move on as a director. You can decide when to place the company into liquidation, and are also able to appoint your own choice of liquidator. Additionally, if you’re eligible, you can make a claim for director redundancy pay. If your business is struggling financially and you can’t afford to pay staff now that furlough has ended, please contact Carolynn on the Begbies Traynor dedicated business rescue helpline on 0800 1822 367 or via email to carolynn.best@btguk.com. NICHE | 27
