A guide to redundancy post COVID-19

Many businesses are facing challenges. As the coronavirus pandemic has swept the globe, businesses have been forced to evaluate their business and staff structure. This has already led to nearly 650,000 redundancies, with a further 9.4m people still on furlough. The coronavirus job retention scheme is due to close in October. How many of those 9.4 million people will return to work?

We sincerely hope the virus will be kept under control and our economy will slowly begin to return to normality. But the future still remains uncertain. As plans are put in place to future-proof businesses, redundancies may be inevitable.

So how can businesses ensure they stay on the right side of the law when commencing redundancy procedures?

Furlough vs redundancy after the 31st October 2020

Providing the employee agrees, you are legally entitled to extend an employee’s furlough period. Businesses are able to put forward new terms such as reduced pay below 80%. They can also change an employee’s working hours should the employee agree to this in writing. Make sure you explain the need for these changes so your employee understands why changes to their hours or salary may be necessary.

If an employee has been serving your business for two or more years, and are made redundant when furlough is still available, they could claim unfair dismissal. To mitigate against this, you must have fair reasons for making an employee redundant. Document why furlough was not a valid solution. Employers are required to make financial contributions from August. So it’s likely businesses will argue it is no longer financially viable to keep an employee on furlough.

Exploring other options

Consider other options such as unpaid statutory parental leave. Some employees may be grateful for the opportunity not to return to work straight away. They may be required to look after a dependent or have childcare issues. Make sure you keep lines of communication open with your employees and discuss their options honestly.

Redundancy selection

You must ensure the selection criteria and process is not discriminatory in any way. You should have fair, reasonable and justifiable reasons for dismissing the individual in question. It must be related to their role within your business and the needs of the business only. Staff must be consulted about the selection criteria before it is finalised.

The criteria for placing staff on furlough may be different to reasons for redundancy. You cannot assume that it is justified for those furloughed to be at a higher risk of redundancy. Redundancy must be considered separately.

Calculating statutory redundancy pay

Employees are only entitled to statutory redundancy pay if they have been under your employment for at least two years. This is calculated using length of service, age and weekly pay. If an employee is on furlough, ‘weekly pay’ relates to normal, full pay rather than the weekly rate they receive while on furlough.

Any outstanding annual leave must also be paid at the normal, full rate.

Collective consultations vs individual consultations

If you propose to dismiss 20 or more employees in a 90-day period, for reasons not related to the individual, you are able to enter collective consultations. Otherwise, you will need to conduct individual consultations.

The consultation period needs to be a minimum of 30 days if the business proposes to make between 20-99 members of staff redundant. It must be 45 days for 100 or more potential redundancies.

Commencing individual redundancy consultations

If you are commencing redundancy consultations with an individual who has still not returned to work, you will need to decide how these conversations will take place. Will you be able to arrange conference calls, send documents by email address or post and communicate effectively and empathetically without the need for face-to-face discussion? Make sure you ask the employee to attend the meeting from a quiet room where they won’t be disturbed. Ensure others can’t access the meeting invitation. Remind employees that they are able to take notes if they wish, but they are not entitled to record the meeting in any way. Where possible, conduct a virtual meeting as you would a face-to-face meeting. Utilise active listening and ask if employees require a break.

Can an employee make a claim against me?

Only if they have been employed by your company for more than two years. They must also be able to demonstrate that the correct dismissal procedure was not followed. To avoid claims being made against your business, you must do all you can to ensure your employees are treated fairly and correctly throughout the redundancy procedures.

As an employer you must ensure that you don’t discriminate against protected characteristics (age, disability, gender reassignment, marriage and civil partnerships, sex, pregnancy and maternity, race, religion or belief). Even if an employee has worked with you for less than two years, discrimination claims are still valid.

Consider employee wellbeing

Be particularly sensitive to the situation. These conversations are difficult to have. You may not always be able to read an employee’s expression or sense their tone from a video call or email.

It’s important to be kind and understanding. These are incredibly tough times. It’s likely redundancy consultations will be emotionally difficult. Try to help your team as much as possible, ensuring they’re given all the care and support they need.

Supporting all employees

Of course, employer support must be focussed on treating employees who are being made redundant fairly and kindly. It’s worth keeping in mind that redundancies within a business impacts all employees, though. Try to boost general morale within the company. Employees who are not at risk of redundancy may still feel anxious about their job security. They may miss work colleagues who have been made redundant, or feel the business hasn’t handled the redundancy procedure well and will therefore feel demotivated.

Employers must be transparent about redundancy procedures. Let all members of staff know why changes are being made, what these changes are and how redundancies will be handled. Be sensitive but positive for the future, making existing employees feel valued and driven to help the business succeed.

Further reading

https://www.cipd.co.uk/knowledge/fundamentals/emp-law/redundancy/coronavirus-guide

https://www.gov.uk/staff-redundant

Looking for further business advice? Check out our other blogs, including how to enhance workplace safety to avoid employers’ liability claims.

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