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Boris Johnson announces UK coronavirus lockdown: How will SMEs be affected?

Written by Latifa Yedroudj on Tuesday, 24 March 2020. Posted in Politics, Analysis

As Boris Johnson announces a strict police enforced lockdown across the UK, how will SMEs be able to cope with tough times ahead for their business?

Boris Johnson announces UK coronavirus lockdown: How will SMEs be affected?

As Boris Johnson announces a strict police enforced lockdown across the UK, how will SMEs be able to cope with tough times ahead for their business?

This evening, Prime Minister Boris Johnson addressed the nation with his latest update on coronavirus and the next steps the UK will take to safeguard the nation and combat the epidemic. Mr Johnson has today announced he will order police to enforce a complete lockdown of the UK, banning people from leaving their homes in a bid to effectively enforce social distancing. But what does this mean for SMEs across the UK? As the economy comes to a grinding halt.

All “non-essential” shops around the country will be forced to close, including any outdoor gyms, cafes, restaurants, kiosks and places of worship in one of the UK’s toughest measures yet to prevent the spread of COVID-19. Members of the public must not leave their house unless they are shopping for essentials, exercising alone, with one person or household members, receiving medical treatment or providing care, travelling to and from work if it is impossible to work from home. Any member of the public found meeting outside in groups of more than two people without reason could be fined, Mr Johnson said today.

Since the coronavirus outbreak, businesses across the UK have faced several setbacks in their daily operations including drop in sales and supply-chain disruptions. Small businesses in Britain’s high streets will now have no option but to shut down their bases until the pandemic subsides and business returns back to normal. Whilst the support the Government has offered support to businesses with sick pay, the business interruption loan scheme and business rate relief, it is important that the government steps up to re-assess the situation and ensure businesses are provided with the support they need during this tough time. 

SMEs across the UK who are not already working remotely will now be forced to implement procedures in place to ensure all staff are able to work from home effectively. Businesses can continue to provide work to their employees provided workers can carry out their roles from home, business. However, if employees are unable to work from home, they will be considered laid-off and should be paid depending on their contract. The government has recently implemented a Job Retention Scheme to assist businesses and help forgo their employees’ wages. The government will also refund the cost of sick pay to any employees affected by coronavirus for up to 14 days.

“Provided they can still conduct their role from home, and the business is still able to offer them work, they can continue working as normal,” Paul Holcroft, Associate Director at HR and employment law consultancy said. “This will mean that their usual entitlements to pay should also remain at this time. When implementing a period of homeworking, there are several areas to bear in mind. The employee still needs to be able to conduct their role from home. If a business does not feel this will be possible due to their situation at home, such as having to care for small children, it may be advisable not to permit a homeworking period.

“However, this should be assessed carefully. Just because an employee is also caring for children does not necessarily mean they will be unable to do their work. To this end, it is advisable to observe the arrangement and evaluate if it is working in practice. If not, it may be that the homeworking situation should not continue. If they are unable to work from home, they will technically be considered laid-off. How they should be paid in this situation will depend on whether there is a specific lay-off clause in their contract. In the absence of this, the lay-off will need to be at full pay unless an alternative agreement can be reached with them. Again, the staff in this situation will technically be laid-off. Employers should bear in mind that the government has recently announced the Job Retention Scheme, assisting businesses in this situation, that may be an option to consider. Essentially, this permits staff to be placed on furlough, meaning they are on a temporary leave of absence but are retained on the company’s books. Employers who do this will be able to obtain a grant from the government to cover 80% of furloughed employees wages, up to a maximum of £2,500 per month.”

The new Coronavirus Business Interruption Loan Scheme (CBILS) launched by the British Business Bank is now open for application, providing facilities of up to £5M for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cash flow. The Coronavirus Business Interruption Loan Scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities. The scheme provides the lender with a government-backed guarantee, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

However, it is still essential employers manage their staff effectively through proper communication as well as setting weekly or monthly targets to ensure their team are working efficiently and are productive despite the change of environment.

“It is essential to keep up to date with what staff are doing during this period. Management should maintain regular contact with them and encourage group communication where possible,” Mr Holcroft said. “It is also advisable to set targets and ask for daily, weekly or monthly work logs to be filled in. In this way, managers can maintain awareness of what their staff are doing and ask for further clarity if specific tasks have not been completed.”

It is essential businesses have long-term remote working procedures in place and ensure effective communication with their staff, and must also take advantage of the government-backed schemes aimed at helping small businesses on the brink to stay afloat.

About the Author

Latifa Yedroudj

Latifa Yedroudj

Latifa Yedroudj has joined the Elite team to fully immerse herself in the business side of journalism, a strong passion of hers cultivated from young having co-run her mother's start up business since she was 18. Her interests lie in a wide range of subjects, including start ups, business, travel, and anything entrepreneurial she can get her hands on. She has worked for some of the biggest names in journalism including The Guardian and The Mirror. Follow her on @latifayed on Twitter for her latest journo rants.

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