16 September 2020
Law at Work - September 2020 – 1 of 5 Insights
When the Coronavirus Job Retention Scheme comes to an end on 31 October 2020, there is likely to be a wave of redundancies (or indeed a second wave).
If 20 or more dismissals are proposed over a 90-day period, collective consultation obligations will be triggered. Collective redundancy consultation requires careful project management at the best of times so that timelines are not missed and communications within the business are kept joined up. However, this will be even more challenging to get right in a pandemic situation.
First, there is the challenge of consulting remotely and secondly, the pandemic is a unique situation which affects every employee differently. Any redundancy proposal and discussion of possible alternatives may give rise to more individual 'case by case' discussions and considerations than usual. In turn this can affect timescales and finality of process.
Remote consultation is new for most businesses. Key points are to:
There are some questions that arise about the relationship between furlough and redundancy. Initially there was some ambiguity about whether an employee could be consulted with whilst on furlough but it seems likely, from the latest Treasury Direction, that this is permitted and that representatives are allowed to undertake duties for consultation purposes without this being classed as 'work'.
If redundancies cannot be avoided, is it unfair to make employees redundant when furlough is available? There is an argument that it is unfair to make employees for whom the furlough scheme is available redundant, almost drawing parallels with situations where there is 'suitable alternative employment'. The point has not been tested but the fairness of any redundancy dismissal does depend on all the circumstances available at the time and so this is only one factor. Now that employers have to make a higher contribution towards the wage costs of those on furlough this may be a reason why employers have no option but to consider redundancies.
The rules on calculating a redundancy payment changed on 31 July 2020 for those on furlough. A week’s pay for calculating a redundancy payment is based on the rate of a normal week’s pay rather than the rate they are paid during furlough. For those on zero hour contracts, redundancy payments are calculated based on the average rate of a week’s pay earned in the last 12 weeks they worked. The furlough grant cannot be used to pay for an employee’s statutory redundancy payment.
The wellbeing of employees going through the redundancy process should not be overlooked. The combined effect of the pandemic, lockdown and uncertain financial position serves to increase the stress that employees who are going through this process feel. Particular care should be taken to ensure that employees are properly supported and are aware that there is a channel through which they can raise questions or discuss concerns. Taking steps to support employees and follow a proper process is likely not only to reduce claims from disgruntled employees but should also minimise any reputational damage.
by Helen Farr
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