Legal

Making redundancies during Covid-19

28 May 2020 By Emily Russell

Emily Russell explains what employers must consider, including consulting obligations and trade union representatives

The extension of the coronavirus job retention scheme will have left many businesses breathing a sigh of relief. Plans to commence redundancy consultations were undoubtedly being drawn up by employers across the UK, but chancellor Rishi Sunak’s extension of the furlough scheme until October stopped the sword of Damocles from falling. Unfortunately, in these difficult times it is likely the sword will still fall on some jobs eventually. 

Is making employees redundant during the pandemic potentially unfair?

The further extension of the job retention scheme could open up employers to legal action if they make people redundant while it is still running. After all, the scheme was put in place to help organisations avoid redundancies, so employees who lose their jobs by reason of redundancy in these circumstances could indeed have a legal case that their dismissal was unfair.

Whether an employment tribunal would find such dismissals unfair would largely depend on the circumstances and how reasonable the business was in making those redundancies. There are some situations when an employer will have no option but to make redundancies, such as where its business is forced to close permanently. However, where the case is not that extreme, then the obligation to consider alternatives to redundancy would mean the furlough scheme needs to be considered by companies. To protect against the risk of claims, employers should document that they have considered the furlough scheme as an alternative and why it was not a viable solution.

So what should employers do?

While the chancellor may have bought many businesses a bit more time, this is not the moment for employers to rest on their laurels. The key thing for organisations now is to consider whether they will potentially need to make redundancies at the end of the furlough scheme and, if they will, start putting a plan in place. If more than 20 people are being made redundant there will need to be collective redundancy consultation. For 20 to 99 potential redundancies, the consultation period needs to be for a minimum of 30 days, and for 100 or more potential redundancies it is 45 days. Consequently, employers will need to be thinking about starting the consultation period in advance of the scheme ending. This is to ensure that any potential dismissals are timed to take place at the point the scheme finishes, otherwise they will be left paying those staff after the scheme ends. Employers cannot claim back redundancy payments, or payments in lieu of notice under the job retention scheme.

What’s different during the pandemic?

While government guidance makes it clear the consultation process remains the same and has not been altered by the job retention scheme, the means to achieve it are vastly different during the pandemic. 

First, if there is no trade union in the workplace or appropriate existing employee representative body, employee representatives will need to be elected. This could be challenging, but emails or social media are options for holding the elections. Government guidance states that those are on furlough leave can be employee reps. While there is a ‘special circumstances’ defence for not carrying out a full collective consultation, Covid-19 is not automatically such a circumstance. The defence is construed narrowly, and employers still have to take all reasonably practicable steps to comply with their obligations. 

In terms of consulting individually with employees it is clearly not possible to meet face to face in these times of social distancing. Video or telephone calls are options, but it is advisable to avoid emails to furloughed staff as they may not be looking at their work accounts.

If there is an element of selection from a pool of employees who are at risk of redundancy, the normal principles around selection criteria will apply. Businesses should ensure any selection criteria used is not potentially discriminatory. If the member of staff required to carry out the process is currently on furlough leave, the organisation will need to consider bringing them back to work, as it is likely that assisting with the redundancy process in this way would be considered ‘work that provides services for your organisation’. 

The key message is to start looking at whether you may need to make employees redundant, and to keep this under review. Organisations should bear in mind that if redundancies are proposed, they will need to get procedures in place and start any necessary consultation before the job retention scheme ends.

Emily Russell is an employment solicitor at Devonshires

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