Are fintech furloughs going to continue beyond June?

By Aisling Finn on Monday 8 June 2020

Digital Banking

Several fintechs have made use of the government’s Coronavirus Job Retention Scheme, but will they keep using it under the new changes?

Are fintech furloughs going to continue beyond June?
Image source: Jason Bates and David Brear (left and centre)/11:FS

 

Following the introduction of the UK government furlough scheme in March, some fintechs were quick to hop on the programme to protect their employees from unemployment and save companies from folding.

Early fintech adopters of the scheme included digital bank Monzo who offered furlough to 295 members of staff, banking consultancy firm 11:FS who furloughed 15 per cent of its workforce, and the all-your-cards-in-one fintech Curve.

However, Chancellor of the Exchequer Rishi Sunak recently announced there would be changes to the scheme, namely that from August employers would have to start contributing to the scheme.

Additionally, from 1 July 2020 employers will be able to bring back furloughed employees on a part-time basis when necessary.

So what are fintechs planning to do?

Furloughing fintechs

A spokesperson for Monzo told AltFi that the digital bank was unsure on what steps it would take next with regards to the furlough scheme, but that “some staff have begun returning to work.”

Despite currently having employees on the scheme, Monzo is looking to make up to 120 redundancies last week in an attempt to cut costs and it was announced at the beginning of April that founder and former CEO, now President, Tom Blomfield would forgo a salary for the next 12 months to ensure his staff got theirs.

Another furloughing fintech, Curve, currently has 21 employees on the scheme, 17 from its customer care team and the other four from its recruitment team. 

The fintech has approached furloughing differently to its peers, with the 17 customer care team working on a ‘furlough rota’ system.

A spokesperson for Curve told AltFi it chose to do this because it “didn’t want people to be out of the business for too long.”

“We also wanted the furloughed employees to still feel like they were a part of the team,” they added.

The spokesperson also confirmed that come 1 July 2020, Curve would be taking advantage of the government’s part-time furlough offering but that they, understandably, weren’t sure what would happen beyond August and said any decision would rely on government regulation.

Chief people officer at consultancy firm 11:FS, which furloughed 15 per cent of its workforce, Michael Curds told AltFi: “We're currently in the process of reviewing the latest government guidance regarding furlough and how this may affect us."

A fintech which has chosen not to furlough staff and instead make redundancies is Revolut.

Revolut has made several employees redundant and founders Nikolay Storonsky and Vlad Yatsenko have forgone a salary while top executives have taken a 25 per cent pay cut as a result of the ongoing coronavirus-related economic turmoil. 

The digital banking service recently found itself in hot water after it faced allegations that it had pushed over 50 employees to quit before they were fired in its offices in Poland and Portugal, with reports that similar practices were also happening in Bulgaria, Lithuania and the Philippines. 

So, there you have it, some fintechs have already begun the slow process of emerging from furlough and remote working, but there is still a lot of uncertainty surrounding what will happen in the coming months.

Sign up for our newsletters


Your daily 7am download of all things alternative finance and fintech.

Fintech and alternative finance headlines with an exclusive Editor's Note each week. Delivered Monday at midday.