Managing redundancies as furlough ends
The extended flexible Coronavirus Job Retention Scheme (commonly called the furlough scheme) is due to end on 30 September 2021.The furlough scheme has been a saving grace for a lot of employers whilst coronavirus lockdown restrictions have been in place and as we get closer to its discontinuation, businesses should consider how they will manage employees and whether they may need to restructure their staffing requirements to fit with the new economic environment. That being said, employers may find that they have no other choice but to make some roles redundant.
These are the circumstances when a redundancy situation exists:
- the business or part of it is completely shut down
- a specific location (even if moving to a new location) is shut down
- the requirement for employees to do work of a particular kind has reduced or come to an end.
It is important to note that furloughed workers have the same legal rights as any other employee and therefore the same protections apply in relation to unlawful discrimination and unfair dismissal.
Planning is important and employers should remember their obligation to consult. This applies to both furloughed staff and working staff. Employers can (and should) consult with employees on furlough but need to consider the practicalities of this – for example, by ensuring that the meetings take place in a format with which the employee is comfortable, and that their right to be accompanied by a colleague or a trade union representative is respected.
It is also important to check all affected employees’ contracts of employment and other details, for example as regards length of service, notice periods, whether you have the right to make a payment in lieu of notice, the employee’s age and their salary and benefits packages.
If an employer is proposing 20 or more redundancies at one establishment, it will normally need to undertake collective consultation as well as individual consultation. Again, this will involve careful planning, electing employee and consulting with them regarding various matters related to the proposals for at least 30 or 45 days (depending on the numbers involved).
The employer is also required to notify the Redundancy Payments Service ahead of starting consultation, or else face a potentially unlimited fine. Not only are the practical elements important but further, managing the human element; redundancies invoke many emotions, not to mention the emotion already imbedded due to difficult circumstances caused by the pandemic alone, and businesses must be prepared that even the most skilled person can find it hard to make the announcement or sound genuinely concerned when what they have been told to say is scripted; they will go “off script” and you will have to be prepared to clarify things; a “frequently asked questions” document for managers may help to keep them “on message.” These are just some key tips to keep in mind when going through a redundancy process but the most important point is to follow the correct procedure soundly and practically to ensure you don’t pose any risk legal risks, with the most common listed below:
- a “protective award” where the employer has failed to consult collectively with employee representatives:this award starts at 13 weeks’ pay (actual pay, not the statutory capped sum of a week’s pay) per affected employee and a tribunal will only reduce that figure where it believes there is a good reason to do so.
- unfair dismissal:any employee with two years’ service can bring a claim; those with less the appropriate length of continuous service can bring a claim where they believe the reason for their selection for redundancy was unlawful.
- discrimination on the grounds of sex, sexual orientation, race, ethnic origin or nationality, religion or belief, age, disability or on the grounds of being a part-time worker or employee on a fixed-term contract:in the redundancy context, it is unlawful to select candidates for redundancy on these grounds or to treat them differently on these grounds.
- an injunctionto prevent you from breaching a collective agreement
- statutory redundancy pay:employees with two years’ service are entitled to a redundancy payment based on their age, length of service and their weekly pay (up to a maximum of £544 from 6 April 2021); such claims can be made for six months following the dismissal; the maximum payment is currently £16,320 from 6 April 2021
- contractual redundancy pay:if you have promised to pay an enhanced payment to employees, this contractual entitlement can become binding as a matter of custom and practice.
To avoid these legal risks, careful planning of any redundancy exercise will be important and ensuring all information is taken into account regarding redundancy after furlough.