Extension of Furlough Scheme to assist hospitality and leisure businesses
The extension of the Furlough scheme has done little to assist businesses in the leisure and hospitality arena, said leading tax and advisory firm Blick Rothenberg.
Genevieve Morris, a partner at the firm said: ‘On the face of it, the new furlough measures announced by the Chancellor yesterday seem to protect employment and the income of the individual. If the burden is to be shared between the Government and the employer, this is not likely to be successful in the world of hospitality.’
‘In the hospitality sector, employees on a zero hour contract will have been able to benefit from the furlough scheme and receive 80% of their average earnings, with no cost to the employer.
Genevieve added: ‘If the cost of retaining them on furlough in the future hits the businesses bank account, employers will simply bring the employees back from furlough. But because they are on a zero hour contract, the employer has no obligation to provide them with any hours, and so does not need to pay them at all which means that thousands could lose their jobs.
‘Why would businesses spend money they don’t need to, at a time when trading conditions are likely to be difficult and preserving cash vital.’
Genevieve concluded that: ‘In hospitality and leisure sector where zero hour contracts are rife, this is likely to lead to wide scale unemployment and an increase in universal credit claims. As businesses start to reopen to their full capacity, these roles will not be difficult to fill and there will be a huge pool of people in the market, so there really is no benefit to the employer retaining these people now.
‘For more highly skilled jobs or where extensive training is needed, employment is far more likely to be protected as the time and cost to recruit new employees in the future is likely to be more than the cost to the business of keeping them on furlough for now.’
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