Firms are at risk of “permanently” axing staff unless the government provides clarity over whether it will extend its job retention scheme.
The Confederation of British Industry (CBI) said it is worried companies will be forced to start redundancy procedures this Saturday to comply with the minimum 45-day consultation period.
The government’s scheme will pay 80% of an employee’s monthly pay until 1 June.
The Treasury said the scheme could be extended if necessary.
CBI director general Carolyn Fairbairn told the BBC’s Today programme: “We are very concerned that businesses will be forced into a position potentially of having to make people permanently redundant.”
While she said she expected clarity from the government “this week” about extending the national coronavirus lockdown, Ms Fairbairn said: “What we are saying to government is that firms need to be able to plan.
“These are massive decisions being taken on a day-to-day basis that affect people’s lives and livelihoods, and having that clarity of a 45-day notice period for business is absolutely vital.”
The coronavirus job retention scheme, under which the government pays the majority of a person’s monthly salary up to £2,500, covers wages for March, April and May.
A Treasury spokesperson said: “We’ve been taking unprecedented action at unprecedented speed to support businesses, jobs and our economy during this crisis – including through the Coronavirus Job Retention Scheme.
“The scheme is open for an initial three months and we hope conditions will improve sufficiently during this period. However, the Chancellor has been clear he will review extending it for longer if necessary.”
From next Monday, companies will be able to provide data to HMRC of those employees who have been furloughed under the scheme.
Wages are then expected to be in workers’ bank accounts by the end of the month, according to HMRC.
Workers are eligible for the scheme provided that they began in their current employment on or before 28 February.
However, some people who changed jobs around this time have found themselves without any income.
Felicity Williams, age 30, handed in her notice at the Richmond-on-Thames estate agency where she worked on 27 February, with her last day set for 28 March.
“Obviously between those two dates it became apparent that the coronavirus was going to shut things down and there would be some difficulties with me starting my new job on 1 April,” she said.
Although government guidelines state that Ms Williams can go back to her previous employer and ask them to furlough her, she said the company is unwilling to help.
“I’ve been to them four times now and pleaded with them to re-employ me and put me on furlough, just so I’ve got some sort of income coming in, and every time it has been a no,” she said.
Ms Williams said she is also unable to claim universal credit because she lives with her boyfriend, who has savings and an income.
She said: “I have my own bills, I have my own credit cards, my own loans that I need to pay off, and obviously I’ve frozen them for the short term. But it is not going to help me out in terms of paying rent and bills and food.”