The coronavirus pandemic has caused unprecedented levels of disruption to businesses around the world. In the UK, the Government has attempted to mitigate the economic impact of the pandemic via the Coronavirus Job Retention Scheme, whereby businesses are able to apply for a grant to pay furloughed staff up to 80 per cent of their full salary. The scheme has seen huge demand – 140,000 firms applied for cash to pay their furloughed workers within the first eight hours of it going live. However, while the furlough scheme will enable much of the UK’s workforce to keep their job, it does also pose a significant number of administrative challenges for HR and finance departments.
For starters, the furlough scheme legally requires employers to give their employees notification of furlough and produce proof upon request. For small businesses that only have a few employees, this is likely to be a fairly time-consuming task; but for those larger corporations, such as retailer Primark who has furloughed 68,000 members of their workforce, the amount of time and human resource required to distribute furlough notifications is unthinkable.
Secondly, there is the complex challenge of calculating how much each furloughed employee needs to be paid and thus how much money the business needs to reclaim from the Government. Under the scheme, 80 per cent of furloughed employees’ salaries up to the value of £2,500 a month, plus national insurance and pension contributions, will be covered by a government grant. If an employee’s pay varies, the employer can claim that individuals average monthly earnings from the 2019-2020 tax year, or the same months earnings from the previous year, depending on which amount is higher.
Moreover, businesses also need to be able to keep up with the changing furlough regulations set by the Government. We have already seen an example of this in action: employees originally had to be on the payroll before the 28th of February to qualify for furlough, but this has now been extended to 19th March, meaning that a much larger proportion of employees qualify for the scheme. This added layer of complexity requires an additional level of flexibility that many businesses will struggle to find under current circumstances.
The myriad of challenges outlined above means the HR and finance departments that are burdened with managing their organisations furlough processes are left with an administrative headache. Conducting the full furlough process from end-to-end manually could put a huge strain on businesses already tight resources. This is where leveraging existing IT-infrastructure to create an agile software-based furlough solutions can make a big difference.
Finding furlough freedom
Cloud-based applications on platforms such as Oracle’s E-Business Suite are designed to automate tasks that would otherwise be arduous and labour intensive. There are a wide variety of ERP and Human Capital Management (HCM) applications available to meet the dynamic needs of businesses, but just as many of us hadn’t even heard the term “furlough” until recently, not many of them are tailored to the specific challenges HR and finance departments are faced with today.
Businesses need to work with their IT-partners to design a solution that meets the complex demands of the furlough scheme, and that enables them to quickly and efficiently pay their staff on time. In order to do so, there are a number of specific requirements businesses need to consider with their IT partner when designing their furlough solution.
Ease of use and integration
Any software-based furlough solution that businesses design must be easy to use, easily integrated with existing software applications, such as those used for payroll, and require minimal data-entry. Oracle E-Business Suite is a great example of this, as it enables users to use batch element entry (BEE) to input data in large masses.
This allows the user to quickly and robustly enter mass volumes of existing data via excel and other Oracle HCM applications and to manage it in batches thereafter. For businesses that are looking to furlough staff on mass, this means they can submit furlough applications in one go, using existing data from excel or their payroll application.
Another essential requirement for businesses to consider when designing a software-based furlough solution is automation. Any software-based furlough solution should look to automate salary and reclaim calculations. This would mean that once data for the furloughed employees has been inputted into the solution from an organisation’s payroll application, the furlough solution should be able to automatically calculate both fixed-salary and variable pay, as well as pension and national insurance contributions. By using furlough start and end dates the application can ensure that this is repeated for the entirety of the furlough duration. The furlough solution should also be able to make eligibility checks for the scheme based on an employee’s hire date without additional human input.
In addition, a furlough solution could also automate furlough notifications by sending out emails to employees for the duration of the furlough period, while also giving them vital updates as and when the Job Retention Scheme changes. Ultimately, implementing a software-based furlough solution can help businesses to find furlough freedom by ensuring that they are able to pay their employees on time, while meeting all of the Government’s compliance regulations.
Reaching zen with the right partner
Each and every business will have different furlough process requirements and it is unlikely that there will be a one-size fits all software solution to suit every organisations’ need. Thus, in order to find a furlough solution that fits their specific requirements businesses should first look to find a trusted IT-partner that has expertise and understands the databases and applications they currently use. This partner can then work with the organisation’s IT-department to build a furlough solution that is tailored to their each and every need and that takes the pain out of the furlough process.
The pandemic has increased many employees' workloads drastically, and HR professionals need to find the capacity to process furlough applications. By implementing a software solution to take on the challenge for them much of the heavy burden is lifted, so HR professionals can focus on what matters most – the wellbeing of their staff.
Mark Vivian, CEO, Claremont