Part 2: Coronavirus Forward Planning – What Comes After Lockdown?

With the furlough scheme recently being extended to the end of June, employers that have furloughed some (or all) of their workforce have more time to consider their next steps. These might include making cost savings in respect of its staff members.

In the first of our two part series on steps after lockdown (which can be found here), we set out some of the things employers may want to consider now in terms of alternatives to redundancy. In this article, we discuss redundancy- what it means and the steps to follow.

As we touched on previously, making redundancies should be considered a last resort as there will be outgoing costs to think of such as redundancy, holidays accrued and notice pay which in the short term does not necessarily reduce costs, along with the longer term effects to a company’s reputation or to staff morale. Also, if the business model is based on your employees, skilled staff and so on, then future recruitment costs and the loss of key talent may have a bearing on your decision to make redundancies.

The biggest consideration for employers is whether there is a need to collectively consult on any forced redundancies or variation to the terms and conditions of the employment contract, if there are 20 or more employees within one establishment within a 90 day period. Consultation should take place 30 days before if there 20-99 employees who will be effected or 45 days if there are 100 employees or more.

Failure to consult could mean that a tribunal may award up to 90 days’ pay in respect of each employee where there has been a breach of the information and consultation duty (a protective award). A claim can be brought either by the employees individually, by the elected employees or trade unions. An employer may be fined (or a director can in certain circumstances) if it fails to notify the Secretary of State. Failure to provide the notification to the Secretary of State is a criminal offence.

Redundancy process

Whenever there is an obligation to consult collectively, the employer will also need to ensure that it has followed a fair procedure in relation to individuals, including consulting with them properly, so as to minimise claims for unfair dismissal

Making redundancies is always a difficult position for everyone involved and each redundancy situation differs.

The statutory definition of “redundancy” encompasses three types of situation: business closure, workplace closure, and reduction of workforce.

The sanctions for failing to comply with these obligations are severe and so it is really important that you seek legal advice as soon as you become aware you may need to make redundancies.

In any event, employers must follow a fair procedure involving individual consultation and make decisions that are fair and reasonable in the circumstances.

A redundancy dismissal is likely to be unfair unless the employer:

• Identifies an appropriate pool for selection;
• Consults (meaningful) with individuals in the pool;
• Applies objective selection criteria to those in the pool; and
• Considers suitable alternative employment where appropriate, subject to a trial period.

If a redundancy dismissal is unfair, an employee will normally be entitled to (in addition to the redundancy pay and notice entitlements):

• An unfair dismissal basic award; and
• An unfair dismissal compensatory award, to compensate for financial loss arising from the unfair loss of their job.

For step-by-step guidance on adopting a fair procedure when planning to make one or more employees redundant, please contact our employment team who will be able to assist you and provide practical guidance.

The information contained in this article is for information purposes only and is not intended to constitute legal advice. Should you require support and assistance on the employment law implications of the COVID-19 pandemic, our experienced advisors will be able to provide practical advice to support your business through the process. For advice, contact our employment & HR team at [email protected] or call us on 029 2009 5500.