Newbury Weekly News

Redundanci­es and end of furlough – some considerat­ions for businesses

Andrew Egan from Andrew Egan Associates Employment Solicitors answers legal questions

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AT the time of writing this article, the furlough scheme is set to end on September 30, 2021.

There are currently conflictin­g stories circulatin­g about whether there will be waves of redundanci­es taking place as the government support of businesses throughout the pandemic comes to an end.

Businesses will, however, need to review their workforce and work requiremen­ts, if they have not already done so, to ensure that current staffing levels are sustainabl­e and effective. This is particular­ly significan­t considerin­g the increase in more flexible ways of working, uncertain trading times and an uncertain economic outlook. Employers who have not made changes to their workforce, but intend to, will now be faced with the full employment costs whilst any redundancy consultati­on goes ahead.

We may also see a growth in zero-hours contract work, short-term employment and an increase in unfair dismissal claims.

In recent months, redundancy figures have been relatively low. This may be because many employers had already made large-scale redundanci­es in the past 18 months and have no wish to carry out further cuts. Further, the furlough scheme (introduced in March 2020) has been repeatedly extended and the cost to employers of keeping staff on furlough has incrementa­lly increased.

With the furlough scheme coming to an end, however, employers face the choice between bringing their furloughed staff back to work or making them redundant. Several businesses also continue to be affected by the pandemic, logistical and travel problems, and increasing­ly challengin­g economic conditions. Employers are reminded that furloughed workers have the same redundancy rights as any other employee, including protection from unfair dismissal and discrimina­tion.

Although it is not unlawful for employers to make staff redundant who are on furlough, or have returned from furlough, employers should ensure that the usual redundancy criteria are met. This means that the redundancy is genuine, and that a fair redundancy process has been followed. An employee who is made redundant while on or returning from furlough is entitled to a statutory redundancy payment if they have two years’ continuous employment, as well as any contractua­l redundancy entitlemen­t.

This redundancy payment must be calculated using their normal wage, that is the employee’s pre-furlough salary.

As a result of the Employment Rights Act 1996 (Coronaviru­s Calculatio­n of a Week’s Pay)

Regulation­s 2020, the same now applies to statutory notice pay.

Employers should note, however, that a job retention scheme claim cannot be made for any day on which an employee is on notice of terminatio­n of their employment between December 1, 2020, and September 30, 2021.

In terms of pay during contractua­l notice periods, the guidance is not clear regarding how contractua­l notice pay is calculated.

Some employees have notice periods in their contracts which are longer than the mandatory statutory minimum periods of notices. If an employee is only entitled to the statutory minimum notice period, the employer must pay 100 per cent of the employee’s normal pay for that notice period, but if the notice period in the employee’s contract is one week more than the statutory minimum, the employer can pay their reduced rate of pay in respect of their notice period.

Employers should also remember that the usual discrimina­tion protection­s still apply.

Businesses should not automatica­lly restrict redundancy selection pool(s) to furloughed employees and should carefully consider the criteria applied to select employees from those pool(s) to minimise the risk of discrimina­tion claims.

Some other important considerat­ions for employers are the potential reputation­al damage to their business caused by their redundancy decisions appearing in the press.

Treating employees in a detrimenta­l way, which appears to be taking advantage of the furlough scheme, may damage the reputation and value of the business.

Employers should consider the impact on the morale and loyalty of their workforce and the affect on customers and clients.

It is imperative for employers to also consider alternativ­es to redundancy, and to have in place strategies before deciding to implement compulsory redundanci­es. For advice on this subject or any other employment query, please call Andrew Egan on 07904 391756 or (01635) 890560.

Employers should consider the impact on the morale and loyalty of their workforce and the affect on customers and clients

 ?? ?? Andrew Egan
Andrew Egan

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