The investigation comes as companies prepare to start weaning themselves from the government’s authorization scheme, which covers the payroll of nearly 9 million workers.
Businesses are expected to announce a wave of layoffs in the coming weeks, with the government gradually reducing aid available through the program.
The layoff consultations take between 30 and 45 days, depending on the number of employees involved, which means that companies deciding to cut jobs will have to start the process in the coming days.
Businesses will have to decide whether they can afford to keep staff on leave when they have to start contributing to the cost of the government scheme or choose to fire workers.
“Starting in mid-June, I expect a significant increase in layoffs,” said Andrew Sanford, business consulting partner at tax and advisory firm Blick Rothenberg.
The leave plan, which started in March, costs taxpayers around £ 14 billion a month and is used by around 1 million businesses.
Chancellor Rishi Sunak announced in late May that the Treasury will gradually cut the leave scheme – which currently pays 80% of wages up to £ 2,500 – from August.
Companies will first have to pay national employer insurance (ER NIC) and pension contributions for workers on leave, which is equivalent to around 5% of gross salary costs before the start of the leave scheme.
However, starting in October, the government will only pay 60% of wages, up to a maximum of £ 1,875, while employers will have to contribute 20% plus the NIC ER and pensions – which is equivalent to around 23% of the gross costs of employment before the leave.
If companies do not think they will have the incomes to start paying for the vacation leave starting in August, as well as to cover paid time off, they may decide to fire workers.
Gillian McAteer, head of labor law at Citation business consultancy, said there has been a “huge increase” in customer questions about redundancy.
She said that one in five of all customer inquiries now relate to job losses, but added that firing workers can be costly.
“Many of them have had no income, so they are looking for losses and what keeps them going is the loan. The questions we often get are “I have to fire people, but I can’t pay their severance pay.” There are emergency loans that you can apply for if that is the case, “she said.
A number of other changes to the leave rules will also affect employers’ decisions about whether or not to retain staff.
Staff on leave can also be brought back to part-time work from 1 July, employers paying a salary proportional to the hours worked.
However, Sanford has warned that only staff who have been on leave for three weeks before June 30 can join the program on a part-time basis, so companies must decide by June 10 what to do with these workers.
In addition, as of July 1, companies are not allowed to have more employees on leave than before.
Sanford said that to avoid widespread job losses later this year, the government should consider continuing the leave program for the sectors of the economy most affected by the closure.
“There are sectors where government support until the end of October will be adequate, and there are others, in particular the hotel and retail sector, where, with social distancing, I don’t see how they can recruit all their staff. “