The Government’s Furlough Scheme has now been extended to September 2021, enabling employers to continue to reduce their costs while their businesses either cannot operate or cannot operate at full capacity.
While we have seen many retail and hospitality employers re-open recently, some are still closed, and the jury is still out on what the long-term impact of COVID-19 will be for employment in Wales. Sadly, many businesses feel they can no longer open or will no longer need their full complement of staff on their return.
For these employers, redundancy will be their only option.
The CJRS employee guidance confirms that employees can be made redundant while on furlough, and their redundancy rights are unaffected.
These FAQs from our employment law team is designed to help employers considering redundancy for a furloughed employee – however, this is for information only and is not a substitute for advice, which we would always recommend on a 1:1 basis before taking any action, to protect your firm.
Who is entitled to redundancy pay and when does the redundancy process apply?
Employees who have worked for 2 years or more (furlough time counts towards this) are entitled to a redundancy payment. Employees with less than 2 years’ service are not.
Can I make redundancies before the CJRS (Furlough) ends?
Yes. You can begin the redundancy process at any time.
For employers making less than 20 redundancies
If you plan to make fewer than 20 redundancies, then you do not need to collectively consult but you will still need to consult in most cases. We always advise speaking with an employment law solicitor prior to starting the process.
For employers making more than 20 redundancies
If you are making 20 or more redundancies within a 90-day period, then you will need to collectively consult for a minimum of 30 days prior to the first dismissal taking effect. If 100 or more are proposed, you will need to collectively consult for a minimum of 45 days.
Fair redundancy process
Employees who have worked for more than 2 years at date of termination will qualify for redundancy pay and you will need to demonstrate fairness in the procedure.
A “fair” redundancy will include:
- a warning/consultation;
- a fair basis for selection; and
- consideration of alternative employment.
Care should be taken when deciding upon the selection criteria to be used to ensure it is not discriminatory.
Employers should expect to meet with employees on at least two occasions, to discuss with them the reasons for the redundancy, their selection, and any proposed alternatives.
The employee should be encouraged to contribute to these discussions with any ideas they may have to avoid the redundancy.
It is essential that you do not just move from an employee being on furlough to just telling the employee that they are redundant. Consultation is essential and notice periods need to be followed to the letter.
Can I carry out consultation with furloughed employees?
While there is no formal guidance from Government, most lawyers believe that consultation is unlikely to be classified as ‘work’ and therefore, unlike work, can take place while employees are on furlough.
While on furlough, employees are unable to work for their employer but do retain their existing employment rights – which means being subject to a fair redundancy procedure and being kept aware and informed on the process.
Employers are likely to have to undertake virtual consultations where their employees are on furlough and should seek advice from an employment law solicitor ahead of this to ensure that this process is inclusive and fair (for example, making sure employees have access to and are able to use technology (such as for Zoom meetings).
What happens on Termination?
On termination employees will need to be given (1) statutory or contractual notice – the notice period can run while the employee is furloughed – (2) redundancy pay and (3) any pay for accrued but untaken holidays. Employees may be required to take holidays during the notice period subject to the employees’ agreement or the appropriate notice being given under the Working Time Regulations. While taking holidays the furlough pay may need to be topped up to 100% of normal pay.
No dismissals should take effect until the end of the minimum consultation period (30 or 45 days).
In theory notice could be given during the consultation period, with the first dismissal taking effect 31 or 46 days after consultation started.
How do I ensure fairness?
In order to avoid a claim based on an argument that consultation failed to meet the minimum requirements, had not been completed at the time notice was given, or on the grounds the process was unfair we always recommend seeking advice from an employment law solicitor before commencing the redundancy process.
Legal obligations
Where more than 20 employees are being made redundant at any one establishment, employers must also notify the Secretary of State of any proposed redundancies by completing an HR1 form. Failure to do so carries criminal sanctions.
Seek advice
Overall redundancy is a complicated area of law for employers and furlough has added to the complications.
Before acting, we strongly recommend that legal advice is taken. Our team are here to help – and we can advise both employers who want to comply with the regulations and/or employees who feel that their redundancy process or settlement was unfair.
We can give advice either in person, by Teams/Zoom or by telephone.
If you wish to receive an immediate response to your enquiry, please telephone Simon Thomas on 01639 640164 or email at simon.thomas@hutchinsonthomas.com