Advice by Paul Holcroft, Associate Director at Croner
Over the past few days, a raft of UK firms have announced that tens of thousands of people in the UK are set to lose their jobs.
The cuts are mainly being made by High Street retailers and the aviation organisations – two of the areas hardest hit by the coronavirus lockdown.
Ultimately, a redundancy situation should be seen as a last resort. However, in the current climate, employers from all sectors may be faced with the genuine prospect of having to lose staff to cut costs. Before going forward, they should consider alternatives to saving money.
For example, could staff be asked to work fewer hours, agree to a reduction in their pay or be placed back on furlough? Are there any contractual entitlements the company offers that it may consider stopping, following an agreement with staff, if taking this action could save jobs? If an alternative does not seem possible, the company should proceed with the law in mind.
When making staff redundant, employers need to make sure they have a sound business reason for doing so. Having already decided that there is no other option, they should be able to outline why redundancy is necessary clearly. From here, a selection process should be implemented that fairly chooses which staff are to be made redundant.
Decisions should not be based on the characteristics of staff; it is highly advisable to pick specific criteria, such as experience, skills and disciplinary records, and score staff on this basis. It is important to remember that any decision made should not be discriminatory, as this could lead to an unlimited fine from the employment tribunal.
Some employers may consider choosing furloughed staff for redundancy, or staff that have previously been furloughed. Government guidance confirms that furloughed staff can be made redundant, provided the proper legal procedure is followed. In this situation, employers will need to demonstrate why the Job Retention Scheme was not a suitable alternative, taking into account the fact that the government does provide funds to assist with staff wages through the use of the scheme. Employers should remember that just because a member of staff was furloughed previously does not necessarily mean they need to be made redundant now; the company may still need them to stay in their role going forward.
If 20 or more staff are to be made redundant, the employer will need to implement a collective consultation procedure, which involves liaising with employee representatives about the need for the redundancy alongside other areas concerning it. For example, it may be agreed that staff can leave the company during their notice period, without losing any pay, to undergo a trial period in a new job. Representatives can either be from a trade union or elected by staff. Regardless of the numbers, it is advisable to consult with staff anyway; they may suggest an alternative idea that employers haven’t considered.
Once the final decision is made, all affected staff should be given the notice and redundancy pay they are entitled to, including any enhanced rates provided by their contract.