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

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

Published: 31st July 2020
Area: Corporate & Commercial
Author(s): Philip Pepper ,

UPDATE – On 30 July 2020, the government announced that furloughed workers who lose their jobs will be eligible for redundancy pay based on their normal wages – not the furlough rate.

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

Thankfully, the Government’s decision to allow companies to continue furloughing their employees until the end of October will save many businesses from having to consider starting redundancy processes, which are often painful and tricky to manage.

From August, employees who have been furloughed, will be able to return to work on a part-time basis while still getting support from the Government. Being allowed to have furloughed workers undertake part-time work between August and October means that not only can businesses start gearing back up with staffing levels appropriate to customer demand, but also that the financial hit of furlough contributions is reduced.

Our blog on the coronavirus job retention scheme lays out the commonly asked questions, and answers, about furlough leave, including the latest government guidance.

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.

However, should it be a necessity, businesses will need to ensure their HR teams have all the resources they require to cope with mass redundancies.

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.

Given the current social distancing guidelines, 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.

Contact us

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

As the furlough scheme starts to gradually wind down, and the restrictions around social distancing continue, you’ll also need to consider what adjustments need to be made if you are planning to bring any employees into the workplace. Our guide to recovery and resilience addresses those key people-related questions, challenges and opportunities.

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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