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Managing redundancies during COVID-19 – our legal expert looks at the potential pitfalls

Story by
Anna Elliot, Employment Law Partner Osborne Clarke

Anna Elliot looks at managing redundancies during Covid-19

As the pandemic continues and businesses start facing the stark reality of its long term financial impact once the Government’s Coronavirus Job Retention Scheme (CJRS) phases out, redundancies have unfortunately become a priority for HR.

In my previous column, we looked at returning employees to work, redundancies and other cost cutting measures. This month we take a closer look at managing redundancies in the current environment.

For many employers, the looming requirement to contribute towards the pay of furloughed employees from  August 1st is likely to make the CJRS a less viable alternative to redundancy. Recent changes to the CJRS also raise the question of whether continued furlough would be a potential abuse of Government support where it is clear that redundancies will be inevitable.

There is no express obligation to retain staff at the end of the CJRS and the guidance makes it clear that at the end of the scheme employers must decide, depending on their circumstances, whether employees can return to their normal hours. If not, it may be necessary to consider reducing hours or making employees redundant.

There have been no concessions to consultation or other redundancy requirements as a result of the current crisis, which means you still need to ensure there is a fair reason to dismiss and follow a fair process.

The impact of Covid-19 is not, in itself, a fair reason to make redundancies and the Government has confirmed that usual employment laws continue to apply. Employers, therefore, still need to demonstrate that redundancy is a fair reason by establishing one of the usual substantive reasons.

This will include considering why redundancies are an appropriate measure at this particular time given the availability of the CJRS until late October. In order to be fair, it is important that employees are not automatically selected for redundancy purely because they have been furloughed. This is especially the case as many staff may have been furloughed because of caring responsibilities or are shielding due to specific vulnerabilities and selecting those employees over others could trigger discrimination claims.

With many still working remotely or on furlough leave, it will be challenging for employers to engage in collective and individual consultation in the usual manner and  specific considerations will need to be given to how meetings can be undertaken virtually.

Ideally, any virtual consultation meetings should be held via video rather than by phone to aid a more personable interaction. Discussions will need to be handled sensitively and processes will need to be adapted so employees are supported appropriately during and after any meetings with a point of contact, including the availability of any employee assistance program.

Now, more than ever, it is essential that employers do not lose sight of the impact on individual employees. Being at risk of redundancy will inevitably be stressful and this is on top of the impact of Covid-19.

Conducting consultation while employees are on furlough is not specifically addressed in the government guidance, however, given that employees can be made redundant during furlough, it would seem that this is intended. The guidance does also state that employee representatives can undertake duties whilst furloughed and this will not be considered work.

While the guidance does not currently prevent employers from using CJRS funds for notice pay (this should be done with extreme caution), the guidance does state that CJRS funds cannot be used for making a payment in lieu of notice, or for the purposes of making a statutory redundancy payment.

Employers should also be careful when calculating statutory redundancy pay and should seek legal advice when considering whether pre-furlough wages should be used for the purposes of calculation.

Protecting employer brand remains critical, particularly with the media intensifying its spotlight on how employers are treating their workforces and how the CJRS funds are being used (or abused). Employers must remain alert to the reputational risks associated with carrying out large scale redundancies during this time.

While the redundancy process will be tricky during this time, we are seeing restrictions begin to lift and employees are starting to return to their workplaces. So, hopefully, we should see the process begin to return back to normal soon.

As this situation continues to evolve, it remains important to keep on top of Government guidance and adapt your processes as needed.



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