Furlough Costing Hospitality £542 Million Each Month

A report has revealed that the hospitality sector faces a staggering collective monthly furlough bill of £552 million, with average extra employment costs per site per month in addition to the government furlough support is calculated at £3738

The analysis from S4labour, the online labour-scheduling management system from Catton Hospitality reveals that while the scheme has eased mass redundancies and retained jobs in the industry, “it is clear furlough is not the free lunch it is sometimes portrayed as”, they say. At

Operators who use the government support furlough scheme benefit from a grant that covers up to 80% of their employee’s average earnings. However, for the employer, the ability to be able to keep teams employed “comes with a cost and it is no insignificant amount”, S4labour said.

Employers having to continue to pay national insurance contributions, pension costs and holiday is still accrued, none of which are included in the grant.

The total figure for average extra employment costs per month per site, over and above government furlough support, comes to £3,738, which means the monthly furlough bill for hospitality comes to £542m.

S4labour stated: “On top of employment costs, operators have rent to pay, utilities and insurance payments. Government grants based on rateable value are available and are aimed at offsetting a large sum of bills, yet leave operators constantly out of pocket. There are also variable costs to using the furlough scheme, such as cash flow costs owing to the fact the scheme pays in arrears – operators are seeing the money leave their businesses, before being able to claim it back. For most businesses that have little or no expectations of trading profitably for the first four to six months of 2021, funding is becoming more and more critical.”