The end of furlough: challenges for employers making redundancies

Coodes Solicitors employment specialist Philip Sayers comments on some of the challenges for employers faced with making redundancies as the furlough scheme comes to an end.

The Coronavirus Job Retention scheme comes to an end on 30 September 2021. The scheme was launched on 20 April 2020 to protect businesses and workers against the impact of the Coronavirus pandemic. Since then, it has cost the UK economy £66 billion.

At its peak, nearly nine million people were on furlough, but numbers have significantly dropped in recent months as most businesses have reopened.

We cannot predict the impact of ending the furlough scheme but experts, including the Bank of England, have said they expect a rise in unemployment. Some employers may be unable to afford to pay workers, once the Government support stops. Others, such as those reliant on international travel, continue to be disrupted. Therefore, it seem inevitable that some employers will be forced to make redundancies.

The redundancy process is always a difficult and, in the current climate, there are additional challenges. That is why we are offering employers a free consultation.

Being clear on your business case

It is essential to have a solid business reason for making anyone redundant. That means it’s vital to focus on the role, rather than the individual employee. A solid business case for making a position redundant could be that the company needs to cut costs or that the role is no longer needed because of new processes or equipment.

Having a clear business case makes it easier to select the roles for redundancy. However, this can be challenging if you employ more than one person to perform a similar job. Many employers fail to realise that people can have very similar roles in different areas of the business. That is why it is vital to look for parallel roles across departments when you are considering a position for redundancy. In this situation, you should include everyone with a comparable role in the pool of people at risk of redundancy.

Selecting positions for redundancy

Under the Equality Act 2020, it is illegal for employers to select staff for redundancy based on protected characteristics. This brings with it a risk of indirect discrimination claims so it is important to get specialist legal advice on your selection criteria. For example, disability related absences should not be included in any sickness absence that you take into consideration. This may need particularly careful handling with any absences during the pandemic.

When you have a pool of potential redundancies, you can decide on which criteria you will use to produce the final list. This can involve skillset, performance and disciplinary record.

Setting out the redundancy process

The process you need to follow will depend on the number of redundancies you are making. If you are making more than 20 employees redundant within a 90-day period, you will need to follow a collective redundancy process. This has additional requirements, including the need for a representative, often from a trade union, to be involved.

Consulting with your employees

Consulting with employees is a crucial part of any redundancy process, however large or small. In most cases, this will start with a group meeting for staff whose roles are at risk. This is when you would need to outline the business case and initial plans. You will also need to carry out consultation with individual employees.

As with any consultation, this should be a two-way process with staff being given the opportunity to ask questions and suggest alternatives you may not have considered.

This process may be further complicated if you have staff members who are still working partly or entirely from home. Communication may be more difficult with people who are working remotely, so it is important to plan for how you want to meet.

If you are going ahead with a redundancy, you will need to follow up the meeting with a letter to the individual. This should confirm that they are being made redundant and should explain their terms and right to appeal. We can advise you on the correct wording.

Redeploying staff

Many businesses have created new products, systems and processes as they have adapted to the challenges of the pandemic. This could mean that some staff may in fact be able to moved to a new role, rather than being made redundant.

Anyone at risk of redundancy should be offered another position in the organisation, if possible. That means they should be given the chance to take another position that they are qualified for, even if it is more junior than their existing role.

If the employee declines the opportunity to take a ‘suitable role’ then they may not be eligible for redundancy pay. It is important to get legal advice on what constitutes a ‘suitable role’, particularly because suitability in this context is generally assessed from the employee’s point of view.

Understanding the impact of furlough

There are additional challenges for any employers who have taken advantage of the furlough scheme. Accurately working out notice pay and redundancy payments for staff who have been on furlough involves a complex process and it is important to get advice on this.

We are offering employers a free consultation up to 1 November. Find out more about our offer, which includes advice on redundancy and restructuring of roles by calling the Employment Team on: 0800 328 3282 or emailing cde@coodes.co.uk