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Semi-redundancy scheme: Brilliant or barmy?

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“Is this recession giving people in high places God complexes?” asks Charlie Mullins, founder of Pimlico Plumbers. “These guys at the CBI must have been out drinking with Willie Walsh!

“If you’ve got a mortgage to pay and a family to feed, how are you going to survive on about £100 a week for six months?

“Let me get this straight. The CBI believe that you can get away with effectively sacking someone for six months, putting their families through untold hardships, and then these same former employees, who you abandoned, will actually want to come back to work for you again? You can’t play God with people’s lives like that," he continues. "The CBI should be concentrating on helping companies do business better, not cutting the wages bill by throwing loyal workers on the scrap heap.”

Ben Gladstone, CEO of IT services firm Conosco, says the government should take bigger steps: “The government should collect payroll and VAT on much longer payment terms, especially for smaller companies. It could give them a massive injection of working capital just when capital is scarce.”

Is the CBI’s proposal even realistic from a legal perspective? Sue Evans, partner and head of employment team at Lester Aldridge, says she doubts the scheme will help firms retain staff: “While their contracts are suspended, employees are likely to seek alternative employment,” she says.  

“Employers may already have lay-off provisions in their employees’ contracts, which means that if the work disappears they can send employees home with no pay (except the statutory guarantee payment). But beware: there is a labyrinth of legislation on this, which can result in employees eventually claiming redundancy payments."

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Related articles:A budget for economic recovery

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