COVID-19 AND REDUNDANCIES
- AuthorKayleigh Howarth
The COVID-19 pandemic has had huge financial implications on many businesses in the UK. Whilst the government implemented the Coronavirus Job Retention Scheme in March 2020, unfortunately many people find themselves facing redundancy. It was announced on 12 August 2020 that the UK has officially fallen into a recession which will inevitably effect many businesses.
Coronavirus Job Retention Scheme (furlough leave)
Those staff who were placed on furlough leave prior to 10 June 2020 are still able to stay on the job retention scheme until it comes to an end at the end of October. Businesses are able to reclaim 80% of employees' wages (up to a maximum of £2,500).
From 1 August employers must contribute the National Insurance and Pension contributions.
From 1 September the Government will contribute 70% of the wages (employers must contribute at least 10% in addition to NI and Pension contributions.
From 1 October the government will contribute 60% of the wages and employers must contribute at least 20% of the wages in addition to the NI and Pension contributions.
From 1 July, employers were able to 'flexibly furlough' employees meaning employers are able to bring back employees part time or as needed to suit the needs of the business. Employers will need to pay full wages for the time worked and reclaim the time not worked through the scheme.
Unfortunately, the cut-off date to place employees on furlough for the first time was 10 June 2002.
The job retention scheme has been a lifeline for many employers and employees alike. However, with employers now being required to contribute towards the wages and with the scheme coming to an end, employers are undoubtedly facing some difficult decisions about their workforce.
As a result of COVID-19 and the recession it is likely that some employers have seen a decrease in work and revenue. Therefore businesses may need to make redundancies in order to cut costs to sustain the business.
Redundancy can be a fair reason for dismissal, but employers must ensure they follow the proper process in order to minimise the risk of an employee bringing a claim for unfair dismissal.
If an employer is looking to make redundancies then different rules apply depending on the amount of employees to be made redundant. If an employer has 20-99 employees to make redundant, then the employer must follow a consultation process and consult for a minimum of 30 days. If an employer has 100+ redundancies to make then the consultation must last 45 days before any redundancies take place.
In any redundancy process employers should meet with the employees who are affected and inform them that they are at risk of redundancy and liaise with the individuals in an attempt to avoid redundancies and/or offer any suitable alternative employment.
No matter how many employees are being made redundant, employers must ensure that those who are to be made redundant are fairly selected. Employers must identify the pool for selection and how many roles there are available.
Employers must ensure that the criteria is objective and non-discriminatory, examples of commonly used criteria are:
- length of service; and
- disciplinary records.
Please note that absence and length of service are potentially indirect discrimination and for any advice on suitable matrix criteria, please contact Chattertons for specific advice.
It may be the case that some or all of the employees at risk of redundancy are on furlough leave. In this case, employers must liaise with those furloughed employees in the same way as those staff still working.
Employers may wish to offer voluntary redundancy to try and avoid compulsory redundancies, employers however are not obliged to accept applications for voluntary redundancy.
Once those who are to be made redundant are selected, employers must explain to those employees confirming they have been made redundant and setting out what their redundancy pay will be. Any statutory redundancy pay is in addition to their notice pay pursuant to the employment contract.
This blog is intended for general guidance only and any queries regarding redundancies should be directed to the Employment Law team at Chattertons who will be able to advise thoroughly.
You can contact the Employment Law team on 01522 814638.