With less than one month left to go before employers must contribute towards furlough pay under the tapered Coronavirus Job Retention Scheme (CJRS), business owners are set to be making critical decisions as to whether to bring employees back to the workplace, continue to use the CJRS or consider whether redundancies are necessary and/or appropriate in their business.
Reminder of CJRS
As a reminder, from 1 July 2021, the Government will pay 70% of wages (capped at £2,187.50 each month) for furloughed employees, which will need to be topped up 10% by employers (up to £312.50).
From 1 August 2021 until 30 September 2021, the Government will pay 60% of wages (capped at £1,875 per month) and the employer will need to pay 20% (up to £625).
The CJRS is currently set to end on 30 September 2021.
Further, as has been the case since 1 December 2020, it is no longer possible to claim payments from the CJRS for employees who are serving a statutory or contractual notice period. As a result, employers will have to carry the financial burden of this, together with any redundancy payment due.
Whilst we are largely optimistic that businesses will bounce back as we emerge from the nationwide restrictions and return to normality, with employer contributions under the CJRS set to steadily increase and the end of the scheme on the horizon, business owners may be considering whether or not redundancies are inevitable and if so, when these decisions need to be made.
Is there a redundancy situation?
A redundancy situation under s139 Employment Rights Act 1996 can arise in three particular scenarios:
- Where there is a closure or intended closure of the business or part of the business in which the employee was employed (Business Closure).
- Where there is a closure or intended closure of the place of work where the employee was employed to work (Workplace Closure).
- Where there is a reduced requirement for employees to carry out work of a particular kind (Reduced Work).
Redundancy Process
Although redundancy is a fair reason for dismissal under s98 Employment Rights Act 1996, a fair process demonstrating how the business decisions have been made in regard to the redundancies (including the pool of individuals and the selection criteria) is vital.
Getting it wrong can result in claims for unfair dismissal being brought, amongst other potentially related claims such as discrimination and a failure to collectively consult etc. This will not only cost the business soaring amounts to defend or pay out, but will also demand a significant amount of time from the business with cases currently being listed into 2022 and beyond, depending upon the number of days required to hear the evidence.
How many redundancies are proposed?
One of the first steps when contemplating redundancies should involve an assessment as to how many redundancies are envisaged.
If 20 or more redundancies are being proposed within a 90-day period, then the collective consultation obligations under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) will be engaged and you will need to notify the Secretary of State of the proposed redundancies. Business owners may need to look back to see if their obligations under TULRCA are triggered as a result of a previous redundancy exercise. The liabilities associated with collective consultation are considerable and businesses should always consider taking advice if these are engaged.
If fewer than 20 employees are proposed, then there are no collective consultation requirements, albeit individual consultation will still be required in order to demonstrate a fair process has been undertaken.
Discrimination
Employer should not assume that colleagues who have been on furlough will be first to be considered for redundancy. Aside from the question of the fairness of selecting for redundancy on this basis without involving the wider workforce, business owners should also be mindful that the protection under the Equality Act 2010 still applies.
In a statement made on 26 May 2021, Kemi Badenock MP (Minister for Equalities) confirmed that the impact of the pandemic on gender equality has not been clear cut. It appears that women have been furloughed at a disproportionate rate to men, however, the latest employment figures indicate that more men have been made redundant. In light of this, the Government is working to address both men and women within its economic support measures.
It is also more likely that employees with long-term health conditions have been furloughed in line with the Government’s guidance on shielding, which could result in a disproportionate number of disabled employees being pooled for redundancy where the wider workforce is not considered – exposing businesses to claims for discrimination.
Homeworking considerations
Working from home was already on the increase pre-pandemic, however, this has escalated rapidly during the pandemic into a more permanent way of working. Many large organisations have announced a complete shift to homeworking, or what is referred to as hybrid working, where employees do a mix of being in the office and at home. You can read more about hybrid working in our blog here.
As a result, business owners may be contemplating workplace closures to move to permanent homeworking and to reduce overhead costs and estate. However, in doing this, business owners need to be mindful that a workplace closure could trigger redundancies, thus resulting in employees claiming redundancy pay – even though the majority may be quite happy working from home. We explored this in more detail in our recent working from home blog.
Conclusion
With redundancies still foreseeable and increasingly more likely over the coming months, we can help business owners put together robust business cases for proposed redundancies and provide step by step guidance to ensure that the correct procedures and processes are carried out.
We can also support businesses by providing bespoke training, to guide managers through the redundancy process, whilst highlighting key considerations and pitfalls.
If you require any assistance, please do not hesitate to contact a member of our Employment Team who will be able to help.
This article contains a general overview of information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.
