The government’s furlough scheme has provided an economic lifeline for many businesses over the past year or so. Even though the construction industry has been less affected than many sectors by the various national lockdowns, the sector continues to make use of the Coronavirus Job Retention Scheme, as it is officially called.
According to government statistics, the number of employees on furlough from the construction sector peaked at 723,600 in April 2020 but remained at 166,600 in April 2021.
While some construction firms have survived the worst of the lockdown relatively unscathed, others have visible scars in the form of red ink on their accounts. Worst affected have been those who rely more on commercial building work than public infrastructure. Sir Robert McAlpine made a pre-tax loss of £26.8m last year, for example, and Multiplex UK lost £158m. Others with broader bases, such as Balfour Beatty and Morgan Sindall, have stayed in the black, but with substantially reduced profits. No one has found it easy and government support has been gratefully accepted by many to get through the tightest spots.
However, the Coronavirus Job Retention Scheme closes on 30th September 2021, presenting whole new challenges. Affected employers should be bracing themselves for a post-furlough hangover, the symptoms of which may include a resentful, deskilled, and divided workforce.
And it is not just the furloughed staff returning to the office; similar issues will likely arise with teams attempting to regroup in the office after 14 months of working from home.
As construction firms readjust to life together, how can employers effectively manage the reintegration risks?
Address the legacy of hasty furlough decisions
Before embarking on a reintegration journey, employers should not forget that the furlough scheme was introduced at a time of business panic and turmoil. Three quarters of a million construction professionals were put on furlough within a period of four weeks in 2020. Many employers had to make hasty decisions, commonly prioritising those who were reluctant to attend their workplace for underlying health reasons, or those who requested furlough to meet childcare obligations. Of the remaining workforce, employees were quickly and crudely selected based on their role, skill set and perceived value in continuing business operations.
Although employees could only be placed on furlough with their consent, in reality many had little choice but to agree when faced with the alternative of redundancy. Employees returning to the business may therefore feel disgruntled or even hurt by their employer’s choices, and bearing this in mind when communicating with returning staff may prove critical in mitigating further discontent.
Be careful how you compensate the non-furloughed
Ultimately, employers have been placed in an impossible position, as furlough selection has commonly bred bad feeling among both ‘pockets’ of the workforce. Furloughed staff, who often view their selection as an indication that they were valued less than their peers, may fear that they have been deskilled while furloughed or that their absence has rendered them more susceptible to future redundancy. Conversely, non-furloughed staff are likely to feel resentment towards their ‘well rested’ colleagues, burnt out and exposed to greater risk and pressure as a result of reduced staffing levels.
Mounting workloads and rising pressures for the non-furloughed population has inevitably led to a divided workforce in many cases.
Many employers have attempted to deal with these issues with incentive payments, bonuses or other rewards for non-furloughed staff who have gone ‘above and beyond’. Although potentially helpful, these schemes are not without risk, particularly where employees were originally selected for furlough on grounds of disability, race, or ethnicity (where this translated to greater health risk), pregnancy or childcare responsibilities – all of which can be ‘protected characteristics’ under the Equality Act 2010 (or, in the case of childcare, may constitute indirect discrimination). Considering how to celebrate your non-furloughed workers is critical, but be careful of potential tripwires.
Consider alternative compensation
In light of this, we are on the cusp of seeing Covid-related reward and bonus issues tested in Employment Tribunals. Although there have been no publicised decisions involving construction firms to date, it seems unlikely that employers will be able to successfully defend decisions that are discriminatory (for example, a ‘Covid-working bonus’ denied to a shielding furloughed employee). The sector would be wise to consider the risks.
Non-monetary morale-based incentives, such as social events (even if held virtually) aimed at reintegrating staff and forging relationships, or ‘thank you’ schemes that celebrate significant contributions, carry much less risk.
Explore how you can address furlough gender penalties
Statistics show that women have generally been furloughed at a disproportionate rate to men across all sectors, leading to concerns of a furlough penalty in the form of stalled career progression or gender furlough pay gap. Although the construction sector has traditionally been male-dominated, significant progress has been made in recent times to improve gender equality. For example, 37% of new entrants into the industry are now women, and progressive policies like the improved maternity benefits offered by McAlpine, Wates, and others, are helping women access senior roles too.
To ensure that such progression is not lost, employers must seek to mitigate the negative effects of the pandemic by doubling down on efforts to effectively reintegrate furloughed employees. This can be done by creating policies that ensure female career progression isn’t stalled upon a return to the office; for example, providing flexibility for a working mother to meet childcare obligations, or ensuring that those who have been unable to attain ‘on the job’ site training are not prejudiced.
Use the tapering of furlough grants
Helpfully, the furlough scheme will not simply expire overnight come 30th September. Instead, it will taper down, providing a useful mechanism for employers who are reintegrating teams gradually over the course of the summer.
At its most generous, the furlough scheme enabled eligible employers to claim grants of up to 80% of the usual wages of furloughed staff (capped at £2,500 per month) plus associated employer National Insurance and automatic enrolment pension contributions. From 1st July 2021, the level of grant will be reduced to 70% of usual wages (capped at £2,187.50 per month) and further reduced to 60% in August (capped at £1,875), with employers having to make up the difference to 80% and pay associated National Insurance and pension contributions. The grant will remain at 60% until the scheme closes on 30th September 2021.
Don’t forget that furlough is only one piece of the jigsaw
Furlough is not the only cause of a two-tier workforce. Working from home has become a widespread phenomenon over the past year, particularly among consultancy firms, but attitudes vary as to the merits of encouraging it to continue. Arcadis is set to take a fully flexible approach; Arup is insisting on two days a week in an office; Gleeds is seeking to reduce the number of desks at its 20 UK offices by as much as 40%; Heyne Tillett Steel is intending that all its 132 staff will return to their desks when lockdown restrictions end. Regardless of their position on this hybrid working scale, employers need to be aware of possible tensions that may arise following a lengthy period of home working.
While contracts may require workers to come into the office or onto site, the effects of the pandemic should not be disregarded. Employees who are reluctant to return, perhaps because they were shielding, should be consulted to understand their concerns and the possibility of alternative arrangements considered. Similarly, reasonable adjustments may need to be implemented for employees with disabilities. Employers should also prepare for a possible increase in flexible working requests and be careful to avoid indirectly discriminating against women with childcare responsibilities.
Now, tread carefully
As the furlough scheme sings its swan song, restrictions eventually end and we navigate a return to the office, employee resentment and reintegration are some of the biggest human resources challenges that business faces. As a sector heavily fragmented with furloughed, non-furloughed, home-based, and office-based staff, this issue is a key concern for construction companies. Also, given it has lost £301m a day at certain points over the past 14 months, the construction world’s road to recovery is critically important. To ensure it is as smooth as possible – for both employer and employee – firms would be wise to consider post-Covid reintegration policies sooner rather than later.