Redundancies and end of furlough – some considerations for businesses
Andrew Egan from Andrew Egan Associates Employment Solicitors answers legal questions
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