Coronavirus has changed the working landscape immeasurably since it arrived in the UK in late January. Businesses will have had to consider a range of responses – to ensure survival; one of these is redundancy.
The end date for the Government’s furlough job retention scheme is set for later this year.
Redundancy will be a consideration many businesses will need to start planning for now, even whilst colleagues are still furloughed.
The British Airways redundancy announcement recently has highlighted the hardship many other businesses are currently facing.
With this in mind, we’re looking at coronavirus redundancy, redundancy on furlough and the facts employers need to know.
What is redundancy?
The definition describes a situation whereby the need for employees to carry out work of a particular kind in that location has ceased or diminished. It is a form of dismissal from a job.
What are an employee’s statutory redundancy rights?
Statutory redundancy rights are written into employment law. An employee has these rights if they are legally classed as an employee. They also must have been working continuously for an employer for 2 years before being made redundant.
Will redundancy rights change due to Coronavirus?
No, they won’t. Neither due to Coronavirus, furlough, or any related knock-on effects. All rights will remain the same for redundancy due to Coronavirus, including redundancy pay.
How much statutory redundancy pay are employees entitled to?
How much redundancy pay an employee is entitled to is calculated based several elements.
It is based on gross pay (before tax), age, and the years they have worked for your employer. Any pay due should be based on an employee’s normal wage, not their furlough wage, if different.
Use the Government’s redundancy pay calculator here
You can find out who isn’t entitled to statutory redundancy pay here
What is a fair redundancy selection criteria?
When selecting roles or people, a fair selection criteria ensures discrimination or bias does not affects the process. If the redundancy is unfair, employees have grounds to complain or even sue.
The following protected characteristics must not be the reason an employee is selected. These include their gender, marital status, race, disability, religion or age, among others.
Bear in mind, the consultation procedure is a key part of a fair process. This is regardless of the size of the business or number of redundancies. It gives employees the chance to have their say and avoid their dismissal if possible
Read our blog here for top tips on ensuring a fair process
Do I still need to use the selection criteria if I’m closing down my business?
If you are closing down your business or a branch, entirely, this is likely to be a clear redundancy situation. There would be no need for pooling or selection criteria
Do I need to complete a form HR1 if I’m planning to make some redundancies?
If you propose to dismiss between 20 – 99 employees within 90 days or less, you must notify the Redundancy Payments Service on form HR1. You should do this before you commence consultation
What about those employees who are at risk of redundancy whilst on maternity leave?
Employees on maternity leave who are at risk of redundancy must be offered suitable alternative roles in advance of others
Is written notice of dismissal effective from the date of the letter?
In a recent case, Newcastle NHS Trust v Haywood, the Supreme Court ruled the following. Where there is no express contractual provision outlining when written notice becomes effective, there is an implied contractual term which states written notice runs from the date it is received and read by the employee, or the date there has been a reasonable opportunity to read this.
To ensure certainty in the date written notice of redundancy takes effect, employers may consider these options.
1. Amending contracts of employment
2. Giving notice verbally and confirming this in writing
3. Hand delivering written letters of dismissal.
How much redundancy notice do I have to give?
Statutory notice periods are:
- At least one week’s notice if employed between one month and 2 years
- One week’s notice for each year if employed between 2 and 12 years
- 12 weeks’ notice if employed for 12 years or more
Before employment ends, the correct notice period must be given. Bear in mind the employee’s contract of employment may entitle them to a longer period than statutory notice. In this case the longer period of contractual notice must be given.
Notice pay is also contractual and therefore must be paid at the contractual rate. An employees’ pay for the notice period will need to be topped up to 100% if you have furloughed them and will be making them redundant.
What about furlough and redundancy?
The purpose of the coronavirus job retention scheme (furlough) is to avoid redundancy. During furlough it is assumed that work is available to which the person employed to undertake the work can return when the furlough ends. This mitigates the need for redundancy.
If during the furlough period, the company decides that at the end of the period it will not have sufficient business to retain all of the staff, then a redundancy consultation can begin during the furlough period. This may be due to coronavirus and its effects.
However, there are many potential pitfalls here.
For example, if it is expected that there will be no available work after the period of furlough, employees may be made redundant.
However if, shortly after the redundancy takes place, the business environment has improved and it is necessary to re-employ staff in the same roles, there is a risk of claims of unfair dismissal from the redundant staff.
There are likely to be many iterations of this situation.
Take expert advice early to ensure that any such risk is substantially reduced
As an employer, what should I be doing if I need to make redundancies during, or after, furlough?
It is important to remember that employment law hasn’t changed. Therefore, the requirements to manage a redundancy process are the same as they were before coronavirus or furlough.
Clearly, the pandemic has changed the context due to social distancing. You are more likely to be conducting briefings, conversations and consultations via video conference (such as Zoom), over the phone or in accordance with the latest social distancing guidelines.
For staff who have been furloughed and are absent from the normal workplace, you will need to think carefully and plan how you manage the redundancy process in the best way.
Good communication and effective engagement with your people are key when managing these situation.
Ensure you stay in touch, communicate regularly, be fair, follow the correct procedures and keep accurate notes throughout.
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