If your business is forced to consider cost saving measures in order to survive following the economic impact of COVID-19, particularly as the Coronavirus Job Retention Scheme (CJRS) comes to an end on 31st October 2020, you may be left with no alternative but to consider reducing headcount and make certain roles within your business redundant.
REDUNDANCY IS A LAST RESORT
Before starting a redundancy process, you should always consider whether there are any other ways in which your business could save money including:
· Rearranging working patterns – this could include a recruitment freeze, reducing overtime, offering sabbaticals or considering job shares
· Reduction in non-essential travel and company vehicles
· Retraining and redeploying staff to other areas within the business
· Temporary lay off
· Short time working
· Accessing the Job Retention Bonus of £1,000 which the government is offering to UK employers for every furloughed employee who remains continuously employed until the end of January 2021.
Before taking any of the steps above you should always take legal advice as it will be important to consider what steps are permitted under an employee’s contract of employment and your organisation’s policies and procedures in order to avoid further complaints or potential claims from employees.
WHAT IS A REDUNDANCY SITUATION?
Redundancy is one of the potentially fair reasons to dismiss an employee if a fair process is followed and there is a genuine redundancy situation. A genuine redundancy situation can occur when a business is closing, a particular office or place of work is closing or where there is a reduction in the need for work of a particular kind to be done. It’s therefore important not to make any rash decisions when it comes to redundancy that could expose your business to unfair dismissal claims from unhappy employees.
WHAT DO YOU NEED TO THINK ABOUT BEFORE STARTING A REDUNDANCY PROCESS?
1. Are there are alternatives to redundancy that have not yet been considered?
2. Is there a genuine redundancy situation?
3. Do you have a contractual redundancy procedure specific to your business, whether express or implied, that must be followed?
4. If your employees are working remotely, on furlough or perhaps on maternity or paternity leave, you will need to ensure that they are included in the process and consider the different abilities of staff to access technology if you are proposing to hold the meetings using video or telephone conferencing ie zoom, Microsoft teams or skype.
5. How many employees are affected by the proposed redundancies? If it is proposed that 20 or more employees are to be made redundant at one establishment within a 90 day period or less then the collective redundancy obligations will apply (see below) and the period of consultation will be either 30 or 45 days.
6. All employers will need to follow a fair procedure involving individual consultation and make dismissal decisions that are fair and reasonable in the circumstances in order to avoid claims for unfair dismissal. In particular, you will need to:
o Warn and consult employees, or their representative(s), about the proposed redundancy.
o Adopt a fair basis on which to select for redundancy, identifying an appropriate pool from which to select potentially redundant employees and where required, assess employees against fair and often objective criteria.
o Remember that it is the role that is being proposed as redundancy, not the individual.
o Consider any suggestions to avoid the need for redundancies that may be proposed including job sharing or reduced working hours.
o Consider suitable alternative employment within your organisation.
7. Calculate what payments affected employees will be entitled to including notice pay, redundancy payments and accrued annual leave. It is important to note that it is not possible to claim for the costs of redundancy payments or payments in lieu of notice (PILON) under the CJRS but employers can continue to claim under the CJRS in respect of statutory and contractual notice periods.
8. Consider what support you can offer your employees who are given notice of redundancy. Do you have an employee assistance programme or access to a counselling service through a private medical insurance policy? Being made redundant is a stressful time for anyone, particularly in the current economic climate so the way that you handle a redundancy process will be important for both your employees who are leaving and the employees who remain. A redundancy process will inevitably have an impact on the entire workforce.
In addition to your obligations to consult with individual employees, collective redundancy obligations will apply where it is proposed that 20 or more employees are to be made redundant at one establishment within a 90 day period or less. Whenever there is a collective redundancy situation, there will still be a need for individual as well as collective consultation, so the two processes will often run in parallel and may sometimes overlap, although some aspects of the collective consultation will need to take place first. If the collective consultation rules apply, you will need to arrange for the election of employee representatives, if you do not recognise a trade union or already have employee representatives in place.
PLANNING A REDUNDANCY PROCESS?
Managing a redundancy process and the affect that it can have on your staff can be very difficult, particularly in light of the fact that some employees may still be furloughed. If you have any questions about redundancy, the end of furlough and how to manage the process, please contact Julie Edmonds, Head of Employment, by email firstname.lastname@example.org; telephone on 0207 644 7286 or contact her on LinkedIn.