The UK’s Coronavirus Job Retention Scheme will continue until the end of October, but the level of state support will be reduced from August, so it comes as no surprise that according to CV Library over 50% of UK employees are worried about job security, with 77% of those furloughed worried that their job won’t exist at the end of furlough. These concerns are not unfounded given that just over a 1/5th of businesses report that they are planning redundancies in the 3 month period to July. We can expect that to ramp up after the 1st August when the scheme is tapered down. There are always exceptions, and the least concerned employees work in the retail, public services and medical sectors – we will continue to need to buy things, provide public services and look after the nations health.
The Government are now clearly focused on getting the economy working which means getting people back to work and businsses away from furlough. It’s welcome news for the economy that non-essential retailers have been given the green light to open in June providing they are Covid-19 secure, with more businesses re-opening during July, providing we continue to control the virus.
Furlough Phase 2
The Chancellor will update us this week on what furlough Phase 2 will look like as from the 1st August 2020. There are reports that the scheme will no longer fund Employers NICs and it has already been stated that employers will be expected to fund the scheme. I’d recommend that employers plan redundancies but, if possible, to hold back on implementing any actual redundancies coming into effect until the Government’s plans for the furlough leave scheme becomes clear later this week.
So how do businesses approach redundancies whilst employees are on furlough?
Whilst the furlough scheme is there to retain jobs, businesses can still move to make redundancies despite the furlough scheme. This does appear to be counter to the intention to retain jobs but there is no obligation for employer to use the furlough scheme to retain a job.
Employees may ask you why redundancies are being made when furlough remains an option until the end of October. If you plan to effect redundancies before the furlough leave scheme ends you will need to be prepared to give a credible explanation. Making redundancies whilst the scheme is operational could make those redundancies more likely to be unfair, unless you have a clear redundancy situation.
Employers must consult with employees who may be impacted by redundancies as soon as possible. This doesn’t mean once you have made the decision, but as soon as you are considering making redundancies to ensure that any consultation is meaningful. In the UK there is a requirement to follow the Acas Code of Practice for making redundancies, bearing in mind there are particular consultation requirements if a business is considering 20 redundancies or more. Consultation can be conducted whilst an employee is on furlough. Whilst the rules of furlough stipulate an employee can not conduct any services for the employer; consultation is not a service.
There is no requirement for consultation to be conducted in a face-to-face meeting. Generally, face to face meetings are better – particularly when conveying bad news – but a virtual meeting or a telephone call has always been legally compliant and will certainly comply in the present requirements of working from home where possible, and ensuring the workplace is Covid-19 secure.
Is part time work an alternative to redundancy?
The Royal Society of Arts has called for a three-day week return to work plan with ‘A’ and ‘B’ teams typically working Monday-Wednesday or Thursday- Saturday. These sorts of policies have been successful in South Korea where the impact of the virus has been better controlled. Part-time working as an alternative to redundancy should be considered during the redundancy consultation. You would still need to consult and you cannot make unilateral changes without consultation and agreement without running the risk of an unfair dismissal claims.
Furlough can be ended at any point and that includes by way of redundancy. The Government’s guidance notes on furlough leave states “your employer can still make you redundant while you’re on furlough or afterwards”. If your employees have signed a furlough agreement which stipulates the amount of notice required to end furlough, this should be taken into account.
The existing rules of employment law still apply therefore redundancies need to be be handled within the current UK legal framework. In order for a redundancy to be fair it must include the following:
- consideration of alternatives to redundancy – remaining furloughed is an alternative, as is part time working
- selection pools and scoring where appropriate
- meaningful individual consultation
- collective consultation if 20 or more at 1 location in 90 days
- right to be accompanied at any meeting which could result in the termination of their employment
- appeal process
- redundancy, notice period and contractual payments
It would not be advisable to use ‘furlough’ as a selection criteria particularly if employees have been furloughed due to shielding as this is likely to be indirect discrimination. Be wary of using length of service, as this may be indirect age discrimination. Think about the skills and competencies you need to retain.
There appears to be nothing in the guidance to say you cannot use the furlough scheme due to notice periods, should redundancy be confirmed at the end of the consultation period. However, bear in mind employees are entitled to full pay, during notice pay, and holiday, so you will need to top up for the notice period and any accrued holiday.
For HR support on the Coronavirus Job Retention and / or Restructuring and Redundancies, please contact me at:
+44 (0) 7803 007 591
Please note that the information is based on the current legal position and is intended as a generic guide only. It is likely that emergency legislation could change the position. It is strongly recommended that you take legal advice on any particular situation.