The government will begin to reduce support to employers and employees through the Job Retention Coronavirus Scheme, generally referred to as “furlough”, from 1 July 2021. As lockdown restrictions are scaled back and the true impact of restrictive measures and repeated lockdowns becomes apparent, the difficult decisions that some businesses may have been able to kick-into-the-long-grass will have to be faced. While the scheme has proved to be an invaluable lifeline for many, others describe it as simply postponing the inevitable.
As the world begins to open up again businesses will have to face different challenges. How to get staff back into work safely will be high on the list and when to relax “furlough” won’t be far behind it. The unpalatable truth is that some businesses may simply be unable to sustain their workforce and, unfortunately, will have to consider letting people go.
Redundancy is one of a limited number of potentially ‘fair’ reasons for dismissal laid down by statute. However, dealing with a redundancy situation can still be daunting for both sides: employees have a number of rights in a redundancy situation, while employers need to ensure that they follow the correct procedures and apply them fairly.
James Leo is a Partner and Head of Employment Law at The Wilkes Partnership “The decision to use redundancy as a means to rationalise staffing levels is never an easy one to make” he says. “When it comes to redundancy, following the correct procedure protects both sides”.
Is there a fair reason for redundancy?
The statutory definition of “redundancy” encompasses three types of situation:
- Business closure: the complete closure of the business
- Workplace closure: plans require the closure of one (or more) of several sites, or relocation to a new site
- Reduced capacity: the business needs fewer employees to do a particular type of work.
The redundancy procedure
Warning/consultation: warn employees who may be affected. Minimum time periods apply depending on the scale of the proposed redundancies, and consultation must begin in good time.
Selection for redundancy: this does not apply when a whole workplace is being shut down. Selection is, however, an essential component of the redundancy process where fewer employees are needed to carry out a particular type of work.
The pool of potential candidates should be a collective of employees who would be considered for redundancy if chosen. There is some flexibility in deciding on the redundancy pool, but it will usually include those doing similar work.
The selection process has three stages:
- Selecting the pool
- Choosing the pool
- Applying the selection criteria.
Selection criteria: the selection criteria should be objective and must be applied fairly. It should include aspects such as experience, qualifications and performance.
Individual consultation: this is an essential part of a fair redundancy procedure. Like the initial warning/consultation, minimum time periods apply depending on the scale of the proposed redundancies, and they must begin in good time.
Alternative employment: employers should consider the availability of alternative employment for employees at risk of redundancy. They should not assume that an employee will not be interested because of different work descriptions or a different location.
Voluntary redundancy: for a variety of reasons some employees may choose to take advantage of the offer to redundancy. This option could reduce the need for compulsory redundancies and so help to avoid selection issues.
Dismissal: if there are no alternatives following the consultation process, selection for redundancy will be confirmed and employees may be given a notice of termination. They should be informed of any right of appeal and, during the notice period, efforts to identify alternative employment should continue.
Unfair dismissal: an employee who has a least two years’ service with their employer could make a claim for unfair dismissal. If successful, the dismissed employee will receive a compensatory award. To avoid a successful claim, the employer must have a fair reason for dismissal and follow a fair procedure.
James Leo continues “As a result of the Coronavirus crisis many employers have put staff “on furlough” in an effort to avoid redundancies. However, if redundancies become inevitable, following the correct redundancy procedure is crucial. When it comes to redundancy, following the correct procedure protects both sides”.
If redundancy is stepping forward to replace furlough in your business, it is essential to have expert guidance throughout the process. Understanding the correct procedure and adhering to the requirements helps to avoid unwelcome repercussions later. James and his team can help you with any employment related matters and make sure that you stay on the right side of employment law. You can contact James or his team at [email protected].