Keith Tully explores how company directors can access essential Covid-19 business support to remedy financial distress and the blurring lines between financial wellbeing and mental health. 

The economic disruption from the coronavirus pandemic had an unprecedented effect on the balance sheet of businesses and individuals alike by eradicating income streams overnight. Businesses heavily dependent on physical footfall to generate income were hard hit, such as restaurants, retailers, and independent shops.

Many small businesses with no other supplementary routes to generate income struggled to stay afloat amid the trading uncertainty and were left to cushion the income gap with limited government financial support in place. As it became evident that the pandemic started to have a blistering effect on the immediate financial future of businesses, employee wages were subsidised under the Coronavirus Job Retention Scheme (CJRS), also known as the furlough scheme.

The future of jobs and the viability of businesses faced severe uncertainty and posed a serious risk to the mental health of staff inside and outside of the workplace. In addition to experiencing personal loss, Covid-19 health scares, to the sudden shift to working from home full-time, 2020 represented a year of unexpected mental challenges running into 2021.

Employee mental health during the coronavirus pandemic  

As of August 2021, approximately 11.6 million jobs were furloughed, leading to a mass reduction of businesses in operation during Covid-19. This marked a pivotal point for office working, as although the recommendation to work from home was made out of necessity, it shattered the norm of traditional office working by providing a universal opportunity to all businesses to trial working from home.

According to the Office for National Statistics, around 1 in 5 (21%) adults experienced some form of depression in early 2021; this is more than double than observed before the pandemic.

During the pandemic, social contact was intentionally carved out from our lives to minimise the spread of Covid-19, leading to months of self-isolation. Physical contact with work colleagues was eliminated, leading to the end of in-person chatter, pleasantries, meet-ups, and mental health check-ups, replaced with virtual interactions.

The magnitude of the changes that came into force as a result of Covid-19 posed a grave risk to both job security and mental health, for which the signs employers must be aware of.

Mental health support for employees following Covid-19 

As the end of the pandemic is now in sight following the successful roll-out of the national vaccination programme, employers must make reasonable arrangements to ease the transition back to the office, such as:

• Review working style: Consider rolling out hybrid working or remote working to maintain flexibility
• Ease social integration: Introduce interactions between co-workers on a gradual basis
• Wellness Action Plan: Established by the mental health charity, Mind, a Wellness Action Plan provides an open invite from employers to employees to discuss the impact of work on mental health
• Reaffirm financial position of business: Address job security for employees returning to work from furlough
• Financial wellbeing support: Financial worries can seriously impact employee productivity and mental health. Promote employee benefits and invite open discussion about money issues

Employers must recognise the signs of mental, emotional, and physical distress, such as changes in mood, confidence, productivity, timekeeping, and physical health. Blurring the lines between home and work during the pandemic is likely to have overlapped personal boundaries. Employers should recognise this and accommodate reasonable requests to protect employee mental health, increase job satisfaction and retention rates.

In addition to the professional role of an employee, working life is influenced by a series of additional factors, such as the location, surrounding neighbourhood, workplace amenities, security, safety, daily commute, and natural opportunities to socialise. The pandemic tipped this routine upside down and triggered full-time working from home which created drastic changes in the lives of anxious workers.

The mental pressure of business insolvency on company directors 

Company directors and business owners are invested in their companies at all levels, making each success of the business a reflection of their own, and failures alike. Operating a business in which you hold personal stakes is likely to have life-changing effects. For example, if your business becomes insolvent, the financial repercussions could impact your core household income and therefore the quality of life of your family.

If your business is failing to generate income because of Covid-19, the practical approach is to seek immediate advice from a licensed insolvency practitioner. As a matter of priority, your appointed insolvency specialist will provide business debt help in the form of a formal company restructuring or rescue solution, or business finance options.

Throughout the process of business recovery, it is imperative to consider the mental health impact and the following three essential points.

• You are not alone: UK insolvency statistics released by Real Business Rescue, insolvency and company rescue firm, found that 643,500 SME businesses were in distress during Q2 2021. The impact of Covid-19 was worldwide, and although the industry has restarted, thousands of businesses are yet to bounce back
• Mental health is a priority: Speak about your situation to unload the burden, and source a practical solution to Covid-19 business debts, cash flow problems and creditor pressure
• Company rescue may be an option: If your business is in financial distress, you may be able to return to a position of financial health with an affordable payment plan in place, approved by creditors

For outstanding HMRC taxes, a Time to Pay arrangement may grant more time to pay, and for temporary cash flow shortfalls, commercial finance may present a remedy.

By digesting the reality of the situation and taking the first step to seek support, you can prevent your business from further deteriorating, save jobs, and therefore livelihoods.

 About the Author 

Keith Tully is an insolvency expert with over 30 years of experience in supporting company directors in financial distress, and Covid-19 recovery since the beginning of the pandemic. Keith is part of Begbies Traynor Group, the UK’s leading Corporate Rescue and Recovery firm, and can advise on business turnaround, commercial finance, and corporate rescue.

Health and Wellbeing at Work 2021

As we look to a post-pandemic world, we consider what the future of work looks like. With 76% of employees experiencing symptoms of burnout in 2020, it is apparent that the well-being and health of the workforce are more important than ever.  

The Health and Wellbeing at Work 2021 will explore the impact COVID-19 has had on health and wellbeing at work, what is being done by organisations to support their employees and what steps the Government is taking to ensure a safe return to work. 

Join us to explore the future of work beyond the crisis, and the pivotal importance of the health and wellbeing of employees, and what changes will be taken forward into the future.  

View the agenda and secure your place.