Redundancy in the current climate
Whilst the extension of the CJRS to the end of October will have come as a relief to many, it unfortunately won’t result in all employers being able to retain all staff.
As a starting point bear in mind that the usual alternatives to compulsory redundancy still exist, including seeking volunteers for redundancy; seeking express agreement to reduced hours and/or salaries; recruitment freezes; withdrawing of job offers; deferring new starts; secondment; redeployment; sabbaticals or other unpaid leave; and negotiated exits. If none of those options are viable and redundancy is an inevitability, what employers need to do exactly and when they need to do it by will vary depending on their particular circumstances.
The starting point is ascertaining that a genuine redundancy situation exists. This requirement will be met where employers have identified a reduction or cessation in their requirement for employees to carry out work of a particular kind, or a need to close all or part of their business. We anticipate this will, regrettably, be straightforward for many employers to establish given current economic conditions.
Having ascertained that a genuine redundancy situation exists, an employer must follow a fair procedure involving individual consultation before making decisions that are fair and reasonable in the circumstances. No mandatory procedure is laid down in the legislation, but in most cases it will involve warning employees of the proposed redundancies; identifying an appropriate pool from which to select potentially redundant employees from; selecting employees against lawful criteria; considering means of avoiding redundancies including suitable alternative employment; and meaningfully consulting and engaging with employees throughout.
In the current climate employers ought to be careful about scoring which weights higher earners (which may disproportionately affect older employees); (un)availability for work through COVID-19 related childcare difficulties/commitments; and selections of those who are shielding, vulnerable or who have underlying heath conditions; as these factors could all be considered discriminatory.
Employers should also keep records of why redundancies were necessary during the period the CJRS remained operational lest a fairness challenge be levied on that ground.
If fewer than 20 redundancies are proposed within a 90 day period then there is no minimum statutory period required for consultation. However, we recommend a process taking not less than a week as a (very) bare minimum, which should mitigate against the likelihood of successful claims.
If between 20 and 99 redundancies are proposed within a 90 day period then collective consultation is required and this needs to begin at least 30 days before the first dismissal is due to take effect.
If there are 100 or more redundancies proposed within a 90 day period then collective consultation must begin at least 45 days before the first dismissal takes effect.
In 20+ cases which trigger collective consultation, additional time should be added on for (i) obtaining tailored legal advice and (ii) election of staff representatives if none are in place – the process is by its nature more complex and higher risk, particularly during lockdown.
In addition to the consultation periods set out above, employers should be mindful of contractual which failing statutory minimum notice periods. It appears that time spent on notice whilst furloughed can be claimed for through the CJRS. In most (but not all) cases it will need to be topped up to 100%. Payments in lieu of notice cannot be reclaimed at all. Nor can statutory redundancy entitlements.
ACAS has some useful free content on redundancy which can be accessed here.
For any questions on redundancy, you'll find Fiona's details at the top of this article.
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