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Employment Law & Coronavirus (COVID-19): Redundancy – looking beyond furloughing

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By Anthony Wilcox

Times are tough for employers. Many have used the government’s Job Retention Scheme to furlough employees, whilst others have found ways to continue operating, but often with reduced workloads and falling income.

The Job Retention Scheme was introduced to provide an alternative to redundancy where businesses cannot maintain their workforce due to the coronavirus.  It offers short-term relief by providing grants towards employee salaries. Currently the scheme is available only until the end of June 2020.

Employers are now looking longer term and assessing what costs their businesses can sustain, inevitably raising the topic of redundancy.  However, as redundancy involves dismissals, it is important that employers conduct any dismissals correctly to avoid legal claims, particularly unfair dismissal.

Before making decisions about redundancies, it is imperative that an employer engages in individual consultation with the employees concerned over the proposal, as well as how it might be implemented. If there is a need to reduce numbers amongst a group of employees, this means consulting with all in the group, usually inviting volunteers and then, if voluntary redundancy does not provide a solution, using objective selection criteria to determine who should be chosen.

Apart from being objective, the selection criteria must not be unlawful. For example, selection taking account of disability-related absence will likely constitute disability discrimination, whilst using length of service will likely constitute age discrimination. With unlimited awards and personal liability for acts of discrimination, conducting selection correctly is vital.

Prior to dismissal, an employer must consider whether it has suitable alternative employment within not only the company, but potentially the group. Suitable vacancies need to be offered to those at risk of redundancy. If an employee is on maternity leave, she is entitled to any suitable alternative vacancy in preference to other employees.

Failing to appropriately consult, select or search for alternative jobs, can render a dismissal unfair and employees with two or more years of service can consider pursuing Employment Tribunal proceedings.

If an employer proposes dismissing 20 or more employees at an “establishment” (sometimes part of a business) within a 90 day period, there is an additional obligation to engage in collective consultation about prescribed information with a recognised trade union or elected employee representatives. Collective consultation must last for at least 30 days, rising to 45 days if there are 100 or more proposed dismissals. Failing to properly appoint representatives or conduct collective consultation risks liability for an award of up to 90 days' pay per affected employee. Additionally, the Secretary of State for Business, Energy and Industrial Strategy must be notified through filing an HR1 form and failure to provide the notification is a criminal offence.

When redundant employees are dismissed, those with two or more years' continuous employment must be paid a statutory redundancy payment unless they rejected a suitable alternative job. All redundant employees must receive notice (or pay in lieu), pay for accrued but untaken holiday and all other contractually due sums. 

With substantial experience of advising on both large and small-scale redundancy exercises, our Employment Law team guide businesses planning redundancies processes, as well as advising employers and employees on the implementation of redundancy processes. We are, therefore, well placed to assist employers and employees alike.

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