Making staff redundant during the coronavirus pandemic – FAQ

FAQ

There is no doubt that coronavirus (COVID-19) is having a devastating impact across many business sectors and that some of those businesses are now facing the real prospect they will need to make redundancies.

A redundancy is a dismissal which is usually recognised as being caused by the closure of the employer’s business; the closure of the employee’s workplace; or the business’s need for employees to carry out work of a particular kind have ceased or diminished, or is expected to cease or diminish.

However, a redundancy may be part of a planned reorganisation or a change in business strategy. It may also be an unavoidable response to an external crisis, such as the current coronavirus pandemic or it may simply be because the business cannot afford to continue to employ staff.

Here are some examples of our most frequently asked questions and answers – for more in depth advice please don’t hesitate to give us a call.

Does the Coronavirus Job Retention Scheme stop us from making redundancies?

No.

While the Coronavirus Job Retention Scheme may reduce the need for redundancies while it lasts, it does not prevent them.

There may be reasons why an employer needs to make employees redundant even while they are furloughed. However, employment tribunals may question why it was necessary to take such a step while the wages of employees were being so heavily subsidised by the state.

Do I still need to follow a redundancy process given this is an unprecedented time?

Yes.

No matter the unusual circumstances in which we find ourselves employers are still required to comply with their duties and follow a fair process, including in relation to individual redundancy consultation.

Can I carry out individual redundancy consultation meetings with employees who are currently on furlough?

The simple answer is yes!

Employees who are working from home or who have been furloughed due to the coronavirus pandemic can take part in consultation processes remotely via video conferencing or telephone.

However, the business will need to make any necessary adjustments to ensure the process is meaningful under these conditions.  This could mean that you need to provide access and guidance on the use of your chosen technology to those that do not already have it, particularly if the employee does not have to use technology in their job role.   If there are likely to be any barriers to meaningful consultation via your chosen method then these should be identified and addressed at the earliest opportunity.

Where you are conducting consultation meetings with employees via video conferencing, or the telephone, it can be difficult to fully gauge the employee’s understanding and they may also be less forthcoming with their views.

You will therefore need to take extra steps to ensure the employee understands the information being given and has a real opportunity to make suggestions relating to the potential redundancy.  This could be in the form of a written communication following the video conference or telephone consultation.

What should be discussed at an individual redundancy consultation meeting?

At the individual meetings, the employer should ask the employee for any suggestions that they may have to avoid redundancies and any suggestions received should be given serious consideration.  The employee must also be given the opportunity to raise any objections to the basis for their provisional selection, for example by discussing the application of the selection criteria. The employer should discuss whether or not there is any suitable alternative employment for the employee, and explain what support is on offer if redundancy is confirmed, such as a reasonable amount of paid time off to look for new employment. The employer should explain the composition of any redundancy package and how the notice period will operate.

The employer should meet with employees provisionally selected for redundancy for several individual consultation meetings. These will usually take place after the employer has provided the affected employees with general information, such as the reason for the proposed redundancies, and information about the selection process, either as part of the formal collective consultation, or in group meetings with the affected employees if no formal collective consultation is required.

How many meetings should be held during the individual consultation process?

There is no set number of meetings that must be held but it is likely that at least two meetings will be necessary.

This is to give the employee the opportunity to consider and respond to the information discussed. It may be necessary for the employer to hold further meetings, before redundancy is confirmed, to discuss any issues outstanding from the previous meetings

Can I dismiss an employee for redundancy before the end of the Coronavirus Job Retention Scheme?

Yes, it is possible.

However, you must remember your employee could argue the dismissal is unfair on the basis that it was unreasonable for you to dismiss them when you could instead have placed them on furlough.

After all the purpose of the Job Retention Scheme is to support businesses through this difficult time with the aim of avoiding redundancies.  Therefore, when determining the business case for redundancies, you must be able to argue that your actions are reasonable e.g. you had continuing costs to bear even if the employee had been on furlough.

Can I select an employee for redundancy on the basis they are on furlough or staying at home due to shielding/childcare responsibilities (whether on furlough or not)?

No.

Not only could this amount to discrimination, it is unlikely that such selection criteria would be helpful in deciding which employees have the skills to help the organisation meet the demands of the business in the future.

The pool of candidates selected for redundancy include employees who are working as well as employees who are currently furloughed – one of the selection criteria we have chosen is performance so how can I apply a fair score to employees currently furloughed?

For those employees on furlough you will need to take account of work done in the period before they were placed on furlough when scoring them against the selection criteria.

I am making an employee redundant with effect from the end of December 2020.  Will I be able to claim furlough pay for this employee while they are serving their notice period?

No.

For claim periods from 1 December 2020, an employer will not be able to claim furlough pay for employees during their notice period (whether statutory or contractual notice) including where they have been given notice of redundancy.

Can I ask an employee who has been given notice of redundancy to work their notice?

Possibly.

An employee who has been given notice of redundancy remains an employee for the duration of the notice period. In theory, an employer could ask a furloughed employee to return to work at any stage before the day the notice expires. There may be a need for the employee to return to work for a short time if there are some loose ends that need to be tied up before they leave.

Whether or not the employer is able to instruct the employee to return will depend on the terms on which they were furloughed. If the employer and employee agreed that the furlough would last for a minimum period, for example to allow the employee to be free to work elsewhere, the employer may not be able to instruct the employee to return, depending on what was agreed. However, in most cases, the employee remains at the disposal of the employer and can be asked to work under their contract without the need for a formal notice period bringing the furlough to an end.

I have calculated the amount I need to pay out in redundancy payments but cannot afford to pay – will the Coronavirus Job Retention Scheme cover this for me?

No, funding from the Coronavirus Job Retention Scheme is not available for this purpose.

An employer is responsible for paying a redundancy payment to any employee who qualifies for one. If you are not in a position to pay, the employee is likely to make a claim in the employment tribunal.

You can apply to the Redundancy Payments Service (RPS) (part of a government agency called the Insolvency Service) for financial assistance. If approved, the RPS will make statutory redundancy payments directly to the redundant employees on the employer’s behalf.  Any employer who is not subject to formal insolvency proceedings can apply this includes businesses that:

  • are still trading
  • have stopped trading but have not gone formally insolvent
  • will soon stop trading but are not going formally insolvent

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