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Handling a redundancy process is, perhaps, not a new thing for most employers to deal with.

By Natasha Smith, Senior Associate

An employer’s guide to redundancies during a pandemic

Handling a redundancy process is, perhaps, not a new thing for most employers to deal with. However, the practicalities of implementing redundancies in the middle of a pandemic is likely to cause additional challenges. For example, there may be ongoing uncertainty over the short (and long) term future of the business, as well as a continued lack of physical presence in the workplace, either due to staff continuing to work remotely or remaining on furlough.

The Government’s Coronavirus Job Retention Scheme (CJRS) has been extended several times but it is scheduled to end in September 2021, with employers being required once again to contribute 10% in July and 20% in August and September 2021. As we saw last year, having such employer contributions looming on the horizon is likely to focus employers’ minds once again on the future viability of jobs. This means decisions will need to be made over whether or not they can afford to continue to retain staff or whether job cuts will be necessary.

Even where the rationale for making redundancies appears clear cut due to the detrimental impact of the pandemic, redundancies can still be a real loss for a business, and most will want to avoid making them if they can. Lengthy notice periods and hefty statutory redundancy pay-outs can be costly (these payments cannot be claimed under the CJRS), and the process can also have a negative impact on the morale of remaining staff and the reputation of the business.

Ensuring the right process is followed not only helps businesses to mitigate against these factors; it will help to ward off costly Employment Tribunal claims landing on the desk, which, let’s face it, is the last thing businesses need at the moment.

What redundancy process should an employer be following?
Clearly, times have been extremely challenging and there have had to be many changes made to the way in which we all work. However, in the same way as if redundancies had been considered prior to Covid-19, employers will still need to consult with staff about the possibility of making them redundant before they make any decisions.

If the decision is pre-determined, without any effort being made to consult or attempt to avoid redundancies as part of a fair and objective process, then employees could have a good chance of establishing it amounted to unfair dismissal, as well as potential discrimination.

Key considerations are:

• Timeframes and Communication: Ensure you leave enough time to consult effectively with your staff. It will help to obtain their ‘buy in’ with the process, if the decision is not sprung on them and rushed through. It is also necessary to establish the correct timeframe to consult if ‘collective consultation’ is required (where 20 or more redundancies are considered likely in a 90-day period).

• Selection for redundancy: Ensure roles identified as ‘at risk’ of redundancy are selected fairly and objectively. Do not only select those unable to work due to factors outside of their control (i.e. health concerns or caring responsibilities etc). The criteria taken into consideration when scoring individuals against each other also needs to be applied fairly to reduce the risk of receiving a discrimination claim. Consider whether employee performance, which is usually high, has been negatively impacted during the pandemic and could unfairly skew the scores.

• Payment calculations: Ensure that you get your financial calculations right. If you miscalculate notice, holiday or furlough pay, you run the risk of receiving a claim for an ‘unlawful deduction of wages’ or breach of contract.

Is it lawful to make someone redundant whilst on furlough?
Yes. At the start of the first lockdown there was some debate as to whether it was lawful to make staff redundant whilst furloughed, given that the rationale behind the CJRS was to ‘preserve’ jobs. However, many businesses have identified that whilst the CJRS allowed some breathing space, in order to stem the flow of job losses, the fact furlough has since been extended several times has resulted in an ‘artificial market’ for many and, sadly, this is not going to be enough to continue putting off these decisions in all cases.

What happens to the notice period when an employee is on furlough?
This will depend on the individual contract of employment, but all employees are entitled to receive their contractual notice pay (based on their pre furlough pay if they have been receiving a reduced salary from their employer).

Are there any alternatives to redundancy?
Employers have an obligation to consider any alternatives that may be available to them, in order to avoid making redundancies. This may include considering whether there are any other suitable roles available within the business; whether contractual terms such as working hours or pay rates can be amended; whether they might introduce a similar private furlough scheme or offering unpaid sabbaticals etc. 

All of these alternatives need to be carefully thought through before being offered and agreed with employees as alternatives to redundancy and, if agreed, then such changes shall also need to be very carefully drafted to ensure the new arrangements are legally binding. 

One final tip - Government guidance is being published and updated on a regular basis. This means it is important for businesses to keep matters under close review and we recommend seeking legal advice with our experienced team at CooperBurnett before undertaking any redundancy processes.

If you would like to discuss any of the above issues or any other employment matter, please do not hesitate to contact Joseph Oates on email: jmo@cooperburnett.com or Natasha Smith on email: nes@cooperburnett.com or tel: 01892 515022.

This blog is not intended as legal advice that can be relied upon and CooperBurnett does not accept any responsibility for the accuracy of its contents.

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May 21, 2021
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