The coronavirus fallout – dealing with redundancies

Insights - 05/05/2020

The chancellor announced on 29 April that more than four million employees have been furloughed – download our previous guidance note here.  At some point over the next few weeks or months, perhaps triggered by the withdrawal of the furlough leave scheme (currently ending in it’s current form on 31st July), companies will be managing their employees’ return to work.

Inevitably one issue will be whether redundancies are necessary.  You should be thinking ahead now to prepare for this situation. To assist in your planning process below is a checklist of some key issues that apply whether or not your employees at risk are furloughed:-

  • Review measures which may help to avoid or reduce the number of redundancies in your business. This will include continuing to access furlough leave and taking advantage of other government schemes, reducing hours /pay, requiring staff to take holidays and/or other cost saving measures.
  • Identify the likely number of potential redundancies as early aspossible so that you can:
    • Manage your cashflow by calculating the potential costs of the redundancy exercise and termination payments such as statutory redundancy pay (N..B a week’s pay for the purposes of calculating Satutory Redundancy Pay increased to £538 per week from 6 April) for those with two or more years’ service. Will you need employees to work their notice or be paid a lump sum in lieu? Will you be enhancing statutory redundancy payments or paying the legal minimum? Will you need to make staged termination payments?
    • Plan when you will commence the redundancy exercise and the timescale to be allowed for the employee consultation process and any subsequent redundancies. This period can start whilst affected staff are furloughed. If proposing to make 20 or more employees redundant at one establishment you must allow a minimum 30 day collective consultation period and for 100 or more redundancies this jumps to 45 days prior to dismissal. Even if you are proposing to dismiss less than 20 employees it is advisable to factor in a consultation period of say 1 – 3 weeks, particularly for employees with two or more years’ service, before any redundancy is confirmed and notice given.
    • Decide how and when will you inform stakeholders such as customers, suppliers, shareholders and the press.
  • Decide on the relevant and ideally objective selection criteria to be applied if you will be choosing from a pool of more than one employee doing a similar job.
  • Identify any alternative employment and keep this under review during the relevant consultation and notice periods.
  • If you have employees affected by the redundancy situation who are pregnant, or on maternity, adoption or shared parental leave they will also need to be consulted with and special rules apply to them in redundancy situations.
  • Are any of the affected employees disabled as defined by the Equality Act 2010. If so you may be required to make reasonable adjustments e.g. re interview arrangements and ensure that that they are not disadvantaged by the selection criteria.

If you require advice on handling a redundancy situation or any of the specific issues raised in this blog contact your usual Morrisons adviser or Mel McCrum in the employment team at [email protected].   

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Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.