Guides & Advice

Redundancies during COVID-19: Coronavirus job retention scheme extension provides some relief

Published: 5th March 2021
Area: Corporate & Commercial

In comparison to the US, there is a stricter redundancy process in the UK. For UK businesses faced with the prospect of making 20 or more staff redundant, there is an obligation to undertake a collective consultation process, which should consider ways to avoid or reduce the number of employees to be made redundant and mitigate the consequences of the redundancies. Where businesses propose between 20 to 99 redundancies the collective consultation process is 30 days. For 100 or more redundancies the period of collective consultation increases to 45 days.

Extension of the Coronavirus Job Retention Scheme

On 3 March 2021 the furlough scheme was extended once again until the end of September 2021. Our comprehensive Q&A guide on the coronavirus job retention scheme addresses those commonly asked questions about furlough and summarises the latest government guidance.

After being a lifeline for countless businesses over recent months, the news that the support is continuing will undoubtedly be met with sighs of relief by many. However, it also raises a number of complexities.

Is extending furlough just delaying the inevitable?

Whilst millions of jobs will be protected, a question mark does still hover over whether the government is still simply delaying the inevitable cliff edge of job cuts.

For businesses that have been saved from making redundancies by this extension, it is vital that they use the extra time wisely to seize every opportunity to make the most of the support available. However, they should also take every measure to ensure that as many furloughed employees as possible can come back into work full time once the scheme ends.

Taking a step back and reviewing expenses and business operations can help to find areas where costs could be reduced, potentially lessening the financial pressure once the end of September arrives, in turn, saving jobs.

The government has provided another generous lifeline for businesses during this challenging period, and it is important that they take advantage of the support while they can. Nevertheless, organisations must not use this as an excuse to ignore difficult decisions until September.

What if we still need to make a number of our employees redundant?

It is inevitable that COVID-19 will force some businesses to make a number of their employees redundant, regardless of the furlough leave extension. It is never an easy decision for employers to make, and in a time where many people are under huge financial pressure, the process can be emotionally draining. Nonetheless, if the worst comes to worst, employers must make sure they follow correct and fair redundancy processes to avoid any claims of unfair dismissal.

Largescale job cuts may lead to complex redundancy situations requiring collective consultation, designing and training managers on completing selection matrix forms, and assisting in individual consultation or appeal meetings with employees selected for redundancy.   Businesses considering largescale redundancies (20 or more) should start planning now.

How do I calculate redundancy pay for furloughed employees?

On 30 July 2020 the government announced that furloughed employees who are made redundant will be eligible for redundancy pay based on their normal wages – not the furlough rate. This also applies to statutory notice pay.

What are the risks when making largescale redundancies?

Adequate and timely planning is crucial.  Businesses who do not recognise trade unions will need to consider electing employee representatives to undertake collective consultation or utilise existing works councils/committees.  A failure to undertake collective consultation properly or at all can be costly (up to 90 days’ pay per employee).

Businesses will also need to ensure that any pooling and/or selection of employees is undertaken correctly and that at risk employees are consulted individually before any final decision to terminate their employment by reason of redundancy is taken. There must also be an appeal mechanism in place to hear any employee appeals.  Businesses will need to consider who will be the most appropriate person (managers/supervisors etc.) to be involved in each stage of the process ensuring that each step of the process is fair to avoid claims for unfair dismissal.

It is not uncommon during largescale redundancies for businesses to experience an increase in the number of grievances received or incur higher levels of sickness absences. Clearly, the nature of making large numbers of redundancies could mean that businesses find themselves exposed to greater numbers of employment tribunal claims, but proper planning, preparation and execution will mitigate against any potential claims.

How to deliver redundancy news while working remotely

As with any redundancy, clear communication and sensitive delivery of the message remains key. If not followed correctly the consequences can be significant, therefore it is important that the process remains fair and reasonable.

With many employees working from home, video conferencing is one of the only platforms available to businesses for face-to-face communications and can be a practical and humane method of making general announcements to the workforce.

Can employees be made redundant over a video call?

In principle, there is no issue with businesses using video conferences to deliver bad news about redundancies, however delivering the message that employees have been dismissed en masse can cause significant employee relations issues and is not recommended.

In order to remain fair, the correct processes must be followed which would include both collective consultation (where necessary) and individual consultation (for those with over two years of service) before a notice of termination is issued.

Redundancies should be handled with compassion and sensitivity

Redundancy during such a challenging period will always be difficult news to deliver, but for many businesses it may be unavoidable. For now, companies should ensure they follow the correct processes and communicate to their employees with compassion and sensitivity.

Watch our 30 minute webinar on how to apply the best practice when dealing with redundancies.

Alternatively, our webinar on alternatives to redundancy outlines what else can be done to save on overheads when redundancy isn’t an option.

We’re here to help

If you’re concerned about having to make redundancies and would like some guidance and support in managing a difficult process, speak to a member of your local employment team.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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