06 May 2020

The Coronavirus Job Retention Scheme (CJRS) is set to remain in place until the end of June 2020. This has proved a lifeline for many businesses but it cannot be a permanent solution. Furloughing staff is not entirely cost neutral, which can be hard to bear for businesses such as those in hospitality, where income has in many cases disappeared altogether, and planning reopening remains all but impossible. 

Many employers are finding that despite the CJRS they still need to reduce costs further, and will not require the same number of staff once lockdown is lifted. Redundancy is starting to rear its head again as the next option to keep businesses afloat, whilst we absorb the likely shape and timescale of the reignition of the country's economy.

1. How do we manage a "common or garden" redundancy process?

Complicated "collective consultation" requirements (see below) do not apply where employers are proposing fewer than 20 redundancies at a single site. Your key focus in this situation is to:

  • observe the employee's contract
  • avoid an unfair dismissal (a claim only employees with two+ years' service can bring) and
  • avoid a discrimination claim (any employee or worker can bring this claim)

A basic, fair redundancy must follow these stages:

  • Consulting with affected employees before your plans are set in stone
  • Using fair criteria, in a fair manner, to select which roles will be made redundant
  • Discussing this with the individual employees, to ensure their voices are heard in the process
  • Considering any alternatives to redundancy
  • Confirming the redundancy in writing, and making any required notice and redundancy payments (only staff with 2+ years' service receive redundancy pay on top of their notice pay).

2. Can we make furloughed employees redundant?

  • Yes, furloughed employees can be made redundant
  • The Government has encouraged businesses to make use of the CJRS wherever possible. As usual, to avoid unfair dismissal claims employers must consider alternatives to redundancy, which might include using the CJRS
  • The primary difficulty employers will have to manage is communicating and consulting with staff while they are out of the workplace, especially where collective consultation duties apply
  • Be aware that you cannot recover redundancy payments/PILONs from the CJRS, but can recover notice pay. Notice pay may need to be paid at 100% of an employee's normal salary for as long as the CJRS is in place.

3. What if the assessing manager is on furlough leave?

  •  A key part of a larger scale redundancy process is the scoring of at-risk employees against objective criteria, such as length of service and attendance, where the employer needs to reduce the size of the pool of employees doing a particular job
  • This is typically done by whichever manager is best placed to assess the staff in that particular pool, ie their line manager or area manager
  • Conducting the scoring exercise would likely be considered by HMRC to be "providing a service" to an employer. Consideration must be given to whether it will be necessary to temporarily unfurlough the relevant manager to enable them to assess and select the employees, although interestingly Acas takes the view that acting as a grievance or disciplinary manager or note taker would not amount to providing a service to the employer
  •  An employee must be furloughed for a minimum of 3 weeks at a time to be eligible for the CJRS, so careful planning may be needed to ensure that an employee's furlough period is not breached accidentally by asking them to assist with employee selection.

4. What if we only have a skeleton HQ team left to do all of this?

  • This might be an opportunity for you to utilise your HR consultants or solicitors who, like our employment team, could help you on a "virtual secondment" basis, providing a dedicated HR consultant or lawyer as extra resource, operating as an extension of your HR team in its decision-making and process planning, and to make contact with your employees
  • It is also worth asking whether your contacts have a suite of documents ready for use in a collective or individual consultation process
  • You might also be able to take advantage of legal technology solutions to reduce the time and cost of producing and reviewing large numbers of documents, to help you capture and visualise data, and to project-manage the redundancy process from start to finish.

Collective consultation 

5. Do we have to elect employee representatives if staff are furloughed?

  • In a normal collective consultation, special representatives consult with an employer on employees' behalf. While HMRC guidance confirms that employees can still act as representatives while furloughed (so long as they're not providing services to or making money for their employer), due to the social distancing and isolation measures in place it may be more difficult for representatives to properly fulfil their required roles
  • A "special circumstances" defence exists whereby if an employer can show that due to special circumstances it is not practicable to consult within the required timescales or consult in the required manner, then the employer is not required to comply with the above obligations. This defence does not entirely remove the requirement to consult and employers must still take all steps to consult that they can in the circumstances
  • If intending to rely on the special circumstances defence to make emergency redundancies through an adapted process as a result of COVID-19, you should say so on your HR1 form.

6. Don't forget the HR1 form

  • In large scale collective consultations, it is not enough to consult with representatives but you also have to file an HR1 form with the Secretary of State for BEIS
  • Failure to file the HR1 form is a criminal offence and attracts a potentially unlimited fine.

If you have any queries on this article or there is anything you would like to discuss, please get in touch with your usual WBD contact.