Legal

How businesses can plan for a future without furlough

15 Apr 2021 By Julian Hoskins

With the end of the job retention scheme in sight, Julian Hoskins outlines the best approach for employers that need to make redundancies

The government’s job retention scheme, which has provided a lifeline for numerous businesses, has been extended until the end of September. Although this has bought employers more time, many will be weighing up difficult decisions about the implications for their workforce when the scheme ends. For some, the reality may be that redundancies are unavoidable. 

Exploring the alternatives

For businesses that need to reshape or reduce their workforce, don’t put off addressing the problem. Making redundancies is something that no employer ever wants to do, but failing to tackle the issue in a timely and structured manner can often make it worse.

Addressing the issue as far in advance as possible means that an organisation can fully explore alternatives to redundancies first. For example, it might be possible to agree variations to individuals’ employment contracts such as a reduction in salary or in hours. This itself is a process that requires time, consultation and dialogue.

Consultation processes

If this is not feasible, or if redundancies will still be needed in addition, then it is essential to factor in the consultation periods required. If more than 20 jobs are to be cut within one establishment, there must be a consultation period of 30 days; if more than 100 jobs are to be lost, this rises to 45 days.

The fact that many employees are working from home, self-isolating or on furlough means that consulting with staff is likely to raise some challenges. Although the preferred process would be to carry out consultations face to face, there is no legal requirement to do so. Consultations can take place over the phone or video conference if both parties agree to it and there is a clear need to do so.

If collective consultation duties have been triggered, the employer’s duty is to consult with representatives of affected employees. Once these representatives have been nominated, an employer’s consultation obligations will become much easier to manage.

Employers will need to ensure all participants have access to suitable IT equipment with videoconferencing facilities available. They may also need to facilitate arrangements for employee or union representatives to be able to liaise and communicate with their colleagues or members remotely. These practicalities may require IT support to be provided to participants and may also require employers to factor in longer timescales for the consultation process.

Settlement agreements 

One way of simplifying and streamlining the redundancy process – while also providing enhanced support to employees themselves – is through settlement agreements. This would be particularly relevant where the employer was offering in excess of the statutory minimum redundancy entitlement.

If an employer is offering enhanced redundancy packages, settlement agreements can be an effective model. The agreement sets out the terms of the package for an individual, who waives their right to make any future claim arising out of their selection for redundancy.

Under a large-scale settlement agreement process a template agreement can be negotiated and agreed, which each individual employee can then sign. A firm of independent legal advisers runs the process and provides advice to employees, which is paid for by the employer. From an employer’s perspective, this is far more cost effective than dealing with a number of solicitors separately engaged by employees. Through this streamlining and centralisation, the process usually runs more smoothly while also offering a high level of support to individuals affected.

The coming months may be a difficult period for many organisations. It is essential, as far as possible, to explore all available options, plan ahead and take a structured approach – for the benefit both of the business itself and its staff.

Julian Hoskins is an employment partner at Bevan Brittan 

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