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    Furlough Fallout Continues: Getting Redundancy Right

    Summary

    Employment Associate Fiona Mendel and Trainee Solicitor Amelia Little highlight the importance of ensuring you get the redundancy process right.

    COVID-19 has had a considerable impact on businesses globally, leaving many under severe financial pressure; redundancies being a regrettable yet inevitable consequence.  The Government’s Coronavirus Job Retention Scheme (CJRS) provided welcome relief to many who were placed on furlough leave and gave businesses the chance to take stock of their requirements as we ride and emerge from the pandemic. With the end of the CJRS in sight (31 October 2020), businesses are now finding themselves having to stick or twist in relation to staff retention. 

    Whilst the redundancy process can be relatively straightforward, employers often mishandle the process leaving themselves exposed to Tribunal claims.  Given that redundancies are expected to be widespread in the coming months, it is no surprise the Law Society is anticipating an “avalanche” of Employment Tribunal claims.

    Redundancy occurs where there is a closure of an entire business, a closure of a place of work or a reduced requirement for employees to do work of a particular kind.  Redundancies must be genuine and not used as a convenient vehicle for removing employees with whom you are unhappy.

    Employees who have two or more years’ service are entitled to a statutory redundancy payment. Employees with this length of service are also eligible to claim unfair dismissal if the reason for their redundancy was not genuine and/or the employer failed to follow a fair procedure. Mistakes businesses should avoid include:

    Failing to explore alternative avenues to redundancies:

    • Given working from home has been the norm for many, and many businesses are considering reducing or relinquishing their office space, can individuals permanently work remotely, or have their duties adjusted to suit what the business now needs?
    • Is offering part time working or job sharing an option to help limit redundancy numbers and costs?
    • Could those who have been furloughed under the CJRS be retained on furlough at least until the scheme ends?

    Failing to offer suitable alternative employment:

    • Employees on maternity, adoption or shared parental leave must be offered any alternative employment available in priority to anyone else, even if they are less suited to or favoured for the role.
    • Alternative employment must be on the same terms and conditions as the employee’s current contract or comparable in relation to the employee’s benefits and status.

    Misuse of selection pools or selection criteria:

    • Failing to include those with similar roles and/or similar skillsets in the same selection pool for redundancy.
    • Only employees in standalone roles should be considered for redundancy on their own.
    • Using criteria which is not relevant to the role in hand, necessary for the future needs of the business, or using subjective criteria that is less easy to measure and stand up to challenge.
    • Attendance as a criterion should be used with care as it could be indirectly discriminatory.
    • Selection criteria such as last in, first out is now highly unlikely to be justified, the effect being potentially indirectly discriminatory on the grounds of age and sex.

    Failing to conduct a ‘meaningful’ consultation with all employees who are at risk of redundancy:

    • ACAS has issued guidance for handling redundancies during COVID-19. It is permitted to consult with employees virtually, including those on furlough leave, provided the employee has access to any necessary technology (such as video or audio conferencing). ACAS also recommend that the outcome of the redundancy process is given to employees directly.  Therefore, a virtual meeting which is later followed up in writing is advised.
    • During the consultation process, employees must be allowed to express their views and put forward any proposals which may avoid their redundancy. The employer must also be able to show that it has seriously considered any proposals put forward by the employee.
    • Where a business proposes to make 20 or more employees redundant within a 90-day period, there are additional requirements. This includes the requirement to collectively consult with recognised trade unions and employee representatives, to provide statutory information and to consult for minimum prescribed periods.

    It is a common misconception that only employees with over two years’ service can present a claim against their employer. Employees with any length service may have a claim where the redundancy is found to be:

    • “Automatically unfair” – this can arise including where an employee’s selection for redundancy relates to pregnancy and childbirth, trade union activity or raising concerns about health and safety; or
    • Discriminatory – this includes selection for redundancy based on a protected characteristic such as age, sex, race or disability.  It can also include those who are at a disadvantage in the selection process – i.e. if the selection criteria include attendance records it can disproportionately affect those with disabilities. This can include those who have suffered with COVID-19, if the impact will be long term and affect their abilities to carry out their normal day-to-day activities.

    Should you have any queries on the above or require any employment related advice, please contact Fiona Mendel at fiona.mendel@seddons.co.uk or on 020 7725 8033 or Head of Employment, Helen Crossland at helen.crossland@seddons.co.uk or on 020 7725 8034.

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