Furlough & Redundancy – Getting it Right

Posted: 19th November 2020

The Extension to the Governments Furlough Scheme is likely to result in more Employees being asked not to work to help the Businesses employing them survive the effects of the Pandemic. For those businesses surviving with fewer employees contributing on a day to day business the temptation to make redundancies may prove difficult to resist. Employers should be aware of the potential pitfalls. First and foremost, the fact that an individual is on furlough leave should not mean that they are at a greater risk of redundancy.

Consultation

The need to consult with employees about the risk of redundancy is a crucial part of any fair Redundancy exercise. Meaningful consultation means talking to and engaging with your employees sensitively openly and sympathetically and the need in many cases to perform this remotely is obviously less than ideal. On a practical level employee should be offered personal meetings where this can be manged in a COVID-19 secure manner. Where a virtual meeting is planned instead, the employee’s agreement should be obtained in advance and where larger scale redundancies are proposed this should be agreed with Employee Representatives.

Redundancy and Notice Payments

The Furlough Scheme is clear in providing that it won’t reimburse Employers for payment of Statutory or Contractually enhanced Redundancy Payments.

When a redundancy payment is due it should be calculated disregarding any reduction in pay there may have been due to having been furloughed.

Any employee dismissed by reason of Redundancy is entitle to be paid their contractual notice period of their statutory notice entitlement if they don’t have a written contract or one which sets out notice entitlement. Notice pay and payments in lieu of notice cannot be claimed back under the current furlough scheme.

Discrimination Claims

According to a recent report prepared by Citizens Advice, parents, disabled people and carers are twice as likely than their counterparts to face redundancy.

Any Employer deciding to make employees in those categories should however be aware of the significant risks associated with such decisions (and identified in the guidance to the Furlough Scheme), because that decision may be found to be an act of indirect discrimination entitling those employees dismissed to claim potentially unlimited compensation.

The risks can be reduced by a careful approach to considering who is at risk of redundancy and in identifying the pools of employees at risk and then in drawing up fair criteria for selection/scoring, ensuring that there is no ‘cherry picking’ of individuals to be put in the pool or those selected from it. Selection criteria should ensure that those who have been furlough are not penalised because of their attendance record or performance which may have been affected by their absence. Employees who have been absent because of shielding or self-isolation requirements are an obvious example.

If you are an Employer considering Redundancies during the Pandemic and would like some guidance please contact Graham Shannon at [email protected] or call on 0191 500 6989.