Sector Focus Prepare for the cost of redundancies

Smaller businesses looking to reduce their workforces should urgently prepare for the costs of redundancies, following changes to the coronavirus job retention scheme made late last year. That’s the warning from human resources

experts The HR Dept, which provides human resources advice and support for more than 6,500 small and medium-sized businesses (SMEs) across the UK and Ireland. Rule changes last December mean that furlough

grants can no longer be used to contribute towards notice pay, something that HR Dept believes many smaller businesses will be unaware of. The firm believes this will prove a major

challenge for some small businesses, many of which are struggling to survive this crisis, once the furlough period comes to an end in September. HR Dept director Sara Abbott said: “Last year,

employers could use the furlough grant to cover the redundancy notice period, topping up the remaining 20 per cent to full pay. “Employers might not realise that this 80 per

cent contribution towards notice can’t happen again. As things stand, changes in furlough rules mean that the employer will not be able to use the furlough grant and will need to pay the notice in full, without government support. “Other employers may not understand

employees’ statutory rights to notice periods, or age factoring when considering redundancy pay. “In any case, employers need to be aware of these issues and start preparing now.


You have a Business, but do you have a Lasting Power of Attorney?

decisions for reasons such as incapacity, illness or being away on holiday. Your nominated attorney(s) would be able to pay wages, fulfil orders, sign documents and more. A business LPA can be tailored

Ian Bond

Lasting Powers of Attorney (LPAs) appoint people to make decisions for you if you are unable to do so yourself. These decisions can be in relation to financial or health- based affairs. However, did you know that you

can also have an LPA for your business affairs? It is often assumed that someone

can make business decisions for you, if you are unable to do so yourself. Unfortunately, this is not necessarily the case.

What is a business LPA? This is where a business LPA comes in. This document acts as a safety net if you cannot make business

to suit all types of businesses e.g. sole traders, partnerships and directorships and works alongside Partnership Agreements and Articles of Association. Business decisions can be covered

by a normal financial LPA, but we recommend that you have separate documents to avoid conflicts of interest. After all, decisions in your best interests may not be in the best interests of your business! If you decide to take this step, it

is important to choose an attorney who is:

• Suitably qualified to make business decisions

• Trustworthy

• Profession specific – For a law firm, you should consider appointing at least one lawyer to act as an attorney.

Choosing the right attorney is vital. Family or friends are good for your personal affairs, but are they the right people to run your business if you cannot do this yourself? These are key factors to consider

not only for your own peace of mind but also for the continuity of your business.

What happens if you lose capacity without a business LPA? Businesses are usually based on Partnership Agreements or Articles of Association. These background documents outline what should happen if an owner loses capacity or is otherwise absent. However, if you are unsure of what might happen to your business in these circumstances, it is important to check or seek legal advice. Without having your affairs in

order, an application to the Court of Protection may be needed to appoint a deputy instead. The court process is often

lengthy and costly, and you might June 2021 CHAMBERLINK 65

find that the court applies restrictions to what the appointed Deputy can do. There is also the risk that the court may appoint a deputy that you may not have approved yourself. This could leave your business in

a vulnerable position and so it is well worth considering your options sooner rather than later.

For advice please contact Ian Bond of Thursfields Solicitors on 0345 20 73 72 8 or

Visit to learn more about the full range of services available for you and your business.

“Particularly where the employees facing

redundancy have long service – this is likely, as they are the most experienced and will have been the most expensive to make redundant last year and remain on furlough – the coming costs could well push businesses under.”

‘Employers might not realise that this 80 per cent contribution towards notice can’t happen again’

To avoid this, the HR Dept is calling for a further

change to the rules to allow the furlough grant to once again be used to contribute towards notice pay again, as was the situation last year. Ms Abbott said: “If the furlough grants could be

put towards notice pay again, employers could potentially start the redundancy process now. Then, if the situation proves less dire than expected, they simply retain the employee and stop the notice period – at no additional cost to the business or the taxpayer. If the redundancy still needs to take place, much of the notice pay cost has already been absorbed. “It wouldn’t cost the Government any extra.

However, with the reality of redundancies rapidly approaching, this measure would let small businesses take those decisions now, so we can avoid a mass of insolvencies further down the line.”

Sara Abbott: Government should reverse furlough regulation changes

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