COVID-19 | Reorganisation and redundancy

COVID-19 | Reorganisation and redundancy

Businesses are doing their best to keep “business as usual”, implementing different and virtual ways of working and doing everything they can to protect their workforce.

However, for some businesses and industries, the impact of the coronavirus may be too severe to survive. Shorter working days and/or redundancy may be the unfortunate inevitable. It’s a difficult time and these decisions are not by any means taken lightly by employers and the approach should be sympathetic and respectful, but it must also be legal.

In this webinar, we’ll look at the rules that need to be followed should this situation arise.

Further information on how to manage the impact of coronavirus can also be found on our coronavirus resource hub and you can view past webinars at SHMA®ON DEMAND.

Please do let us know of future topics that you are interested in, or for more information about our webinars please contact us.

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Webinar transcript

(Please note this is auto-generated and un-edited)

Hi, I'm Mike Hibbs a partner in the employment team at Shakespeare Martineau. Welcome to today's webinar on future proofing your business from an employment law perspective. You'll see on the screen that you're able to ask questions. So, please do ask questions along the way and I'll answer as many as I can and we'll also share a summary of questions with everyone after the webinar. Clearly. You don't need me to say that these are difficult times.
Or that they are unique because of course they are but acting in the best interest of the business and its staff is absolutely crucial and it's undoubtedly the case that when we come out of this as we surely will then staff will remember how their employers treated them during this particular period for decades to come now, that's not to say that there aren't tough choices that face business and that there won't be tough decisions that have to be reached.
So what I'm going to do in this webinar is introduce you to some legal concepts of layoffs short time and redundancy and to some possible other options that businesses are taking at this time and to try and explain a bit about the process. You would have to follow to make sure that you don't face additional burden of tribunal claims and all sorts of other things that might go with it. If you get the procedure wrong, very important to follow the right procedure even in these difficult.
You called times. So first of all, let me say that in cutting costs and retaining skills. How are you able to deal with this? Well, first of all, I think it's important to look at the government packages that may be available to support your particular business do review all of the various options and see how you might be able to claim or whether you'll be able to get payment one way or another and then at the same time you need to consider the resources that your business has.
and any access it's got to particular means of Finance whether it's got the means to be able to repay that in due course, you will also need to look at the cost of your most expensive resource for most businesses not for all which is the staff and any potential redundancies in the future so factor in a couple of weeks of consultation or maybe more if it's going to be a larger number than 20 and look at notice periods and also, At the level of statue redundancy payment or company redundancy pay if that's what your particular business pays. You'll also need to look at other options that might be available to you before we come to lay off in short time.
So there are a number of businesses at the moment who will be looking at shorter working weeks four day weeks three-day weeks and the like in every case you will need to Get the agreement of your employees before you're able to impose such a term. Nonetheless at the moment when the alternative May well be redundancy many employees would be likely to agree to some work rather than no work at all. Another possibility might be to have a period of unpaid leave again. You'll need that to be agreed between you and the employees but a period of unpaid leave might assist.
Or alternatively you might bring forward individuals holiday Arrangements. You can do this. If you've got that power in the contract for in any event, you can insist the people take holiday providing you give them double the length of notice of the length of holiday involved. So if you want to agree five days of holiday being brought forward, then you would have to give 10 days notice of that taking place in all of these kinds.
Circumstances, I'm advising people that they should only make these Arrangements on a temporary basis that is reviewable. Whatever that period is and that will be different for different businesses. That might be a few weeks. It might be a couple of months at the end of that period you would sit down and review and the employees would know that such a review is coming up and that you might be making changes at that particular time next. I want to talk about what I've called time lost.
It's not unique to me, but it's a way of expressing lay off and short time. Lay off. Sometimes is used as if it's the same meaning as redundancy.
It isn't there is a specific legal meaning to it and it is a week when an employee is available for work, but there is no work available short time is less than half a week's work being available and the employee Being available to work. So those are the two meanings of those particular terms. And the first place to look is to look at your contract of employment. There are many manufacturing businesses that will contain the layoff clause and there are lots of other businesses that also include that but equally there are many businesses that do not have a clause enabling layoff or short time. If you haven't got that then you will need the agreement of your work.
Workforce to do it As I said earlier in relation to other options, it will also be the case with layoffs that where that is the old tentative to being made redundant many employees would agree a period of layoffs. You need to bear in mind that during that layoff you need to pay a minimum of a statutory guarantee payment. The current level of that is 29 pounds a day for a maximum of five days.
Over three month period and that's rising to 30 pounds on the 6th of April and there for a hundred and fifty pounds over five days many employers at the moment are being able to agree a more substantial guarantee payment than that as with the other options that I mentioned earlier.
It's only going to be for a limited period of time but they might agree for example as in In one of the case of my clients that they will pay half pay for a period of a few weeks and then it will decline after that on a tapering basis down to the Garrett statutory guarantee payment.
Whatever Arrangement you make can be reviewed at the end of that particular period and potentially renewed once you put somebody on Leo for short time, then after a period of time the employee is entitled to claim their redundancy payment or though Was the employer can serve a counter notice. It's beyond the scope of this webinar for me to explain all the details of that which are quite complex, but there are time limits for making those particular arrangements. So if you need advice, then please ask for the details and we can help you with that. It's unlikely again that redundancy payments will be claimed anytime soon.
But at some point or other an employee might Do that and if you're not in a position to be able to provide further work, then that might well be what would occur as I say accountant Otis is possible now dealing with redundancy in relation to redundancy. This is the ultimate measure because of course it terminates employment that will be the end of your relationship with that particular employee in order to carry out redundancy.
There will be need to be a A period of consultation and you'll need to be sure that actually it is a redundancy situation. So there are only three potential redundancy situations. First of them is your closing the place of work altogether or secondly that you are removing a particular post you no longer need somebody to do a particular job or the third possibilities you need less people to do a particular job.
And therefore you're reducing the the numbers when it comes to consultation if you're making twenty or more redundant in one establishment and an establishment is usually a workplace then within a 90-day period then you will need to consult collectively that will mean in the case of recognised trade unions a consultation with the Trade union, but if you don't recognize the Trade union, then you'll need to offer the employees the alternative of electing representatives.
Sensitives to be consulted you'll also need to notify the government on an HR 1 form. If it's of the numbers that need Collective consultation in both cases Collective consultation and numbers less than 20 you will need to have individual consultation.
Unlike Collective consultation where you have a set period you need to consult for 30 days or 45 days depending on how many people you're making redundant with individual consultation that can be done over a shorter period as a week or even perhaps slightly less than that and it will involve looking at suitable Alternatives or ways of avoiding redundancy.
In these circumstances, maybe there won't be many of those but it might be that somebody were to would say that they in particular were prepared to have a period where they were not paid and would like to postpone their redundancy and you might be prepared to consider doing that in terms of selection. If you're selecting between a group of people who are all doing similar work and you just need less people doing that.
Then you will need to come up with um, criteria many businesses will do a matrix which involves putting the names down one side and across the trop top the particular selection criteria that you're going to take into account.
So the criteria that you might include are things like the qualifications to do the job ability to operate particular kinds of Machinery whether or not they've had a disciplinary against them what their attendance record is like Would be applied to each of those and those with the lowest score would be those who are put at risk of redundancy and ultimately made redundant.
When you come to terminate, then you will need to pay notice pay now that could be because you're insisting that notices worked or alternatively it could be because you're placing them on Garden leave if you've got a provision in the contract or other otherwise reach agreement and then you're paying monthly to the end of their notice or alternatively you could pay them in lieu of notice a lump sum. Now whenever the termination date is the statutory redundancy payment will be due for all those who've got more than two years service and a statutory redundancy payment is calculated on the basis of age and length of service to a maximum of 20 years.
So for those over the age of 41 for particular years of service those years will count as a week and a half for those between 21 and 41 a week.
And for those who serve time below 21, it would be half a week, but it's only the last 20 years or if less whatever period of time that are taken into account and there is a maximum pay for statutory redundancy payment for a week's pay and that is hundred and twenty-five pounds Rising on the 6th of April to 538 pounds for a week's pay so you will see that the total maximum for somebody who has been with you for 20 years over the age of 41 is fifteen thousand seven hundred and fifty pounds and that's rising to 16,000 140 pounds on the 6th of April, but it is very important to get the procedure right in relation to Redundancies you make otherwise an employee will be able to bring a claim for unfair dismissal. Even if it's just on the basis of the procedure rather than on the basis that there is actually a substantive redundancy taking place or not.
On Friday the government announced that he was going to provide a new class of leave called furlough leave whereby individuals who had no work to do would be able to be compensated as to eighty percent of their wages up to a maximum of two thousand five hundred pounds per month.
And this was to include gross pay and also pension payments national insurance payments and other sums that the government have not yet fully specified and the way in which this will be done is that workers will be designated on a portal which is yet to be set up as furlough workers and will therefore no longer be provided with work by their employer clearly for Some employees particularly those below the cap of 2,500. This will be a very attractive alternative to being put on layoff or being made redundant.
Many employers are finding that this is a useful alternative so far as they are concerned. There is no need for an employer in these circumstances to top up the extra 20% Although of course, they could choose to do so and similarly they could choose to pay something towards the difference of salary for those above the 2,500 cap, assuming that they have the resources to enable them to do. So again my strong.
Vice is that this is only done for a limited period of time and not on a permanent basis we will know more when the government are able to get the portal set up but please don't expect that in the next few days is going to take a bit of software engineering to make sure it's up and running and no doubt the government will want to put some anti-avoidance systems in place to make sure that this new benefit is not vojta David I've had a few questions in so if I deal with those first of all someone who says I put my staff on furlough leave what if some work becomes available can I get them to do that work well the answer is that they're not on furlough leave if they're doing work so at any stage when they're doing work they won't be on furlough Leave we're not quite clear as to what gaps will be available. So whether it will be possible for example to put them one week on furlough leave and one week off. But we do know that the government intended to be possible to opt in and out of furlough leave. I suspect it's unlikely to be less than weekly so doubt it will be possible to be one day at a time.
Next question if I lay off my staff. Can I pay them more than the statutory guarantee payment? Well the answer to that is yes, you can but I suggest you only agree to that for a limited period much as I've said in relation to any other issue that you deal with at this time. It's worth not doing these things permanently other than obviously redundancy because we don't know how long all of this is going to go on or for example.
How long the furlough leave Arrangements arm?
I've also got another question. I will need some staff even though I'm making redundancies. Can I pick and choose those that I like the answer is no you should have some objective criteria as much as possible. And anyway, you want the best staff who will be able to work with the business going forward. So it would be appropriate to make sure that there are sensible selection criteria to help you select those.
That's all I've got time for at present, but I will answer any other questions that are sent in and we will send around a list of the questions and answers as soon as possible. Thank you

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