Following HMRC’s announcement on 12 June confirming the winding down of the Coronavirus Job Retention Scheme (CJRS), many employers may have no choice but to start thinking about reducing their work force.
We have seen many big companies recently making redundancies, here, we address questions we find employers are asking in these difficult times.
Can employees be made redundant whilst on furlough?
The Government’s guidance confirms that an employee can be made redundant while on furlough or afterwards, and that an employee's redundancy rights will not be affected by being furloughed. However, an employer cannot claim reimbursement of redundancy payments under the scheme
Although the guidance seems to confirm that a furloughed employee may be made redundant, there has been criticism of employers that have taken this approach (notably in respect of British Airways). However, this is not borne out in the guidance and there does not appear to be anything in the Treasury directions to preclude a claim in these circumstances.
Are there additional considerations when considering making furloughed employees redundant?
There are obvious practical difficulties that could arise in undertaking redundancy consultation while the affected employees are on furlough. The employer would need to consider virtual meetings and, where the employees concerned do not have the facility to participate in a video call, the possibility of conducting consultation meetings by telephone or in writing.
An employee with the requisite period of service is able to bring an unfair dismissal claim against their employer. Regardless of the pandemic, the employer will still need to be able to demonstrate that there is a genuine redundancy situation and that due process has been followed.
How is furlough pay calculated if an employee on furlough is given notice?
Their notice pay would be based on their entitlement under their contract of employment, and the statutory right to notice pay. The rules on statutory notice pay are complex and depend on whether the employer is required to give only statutory notice, or at least a week more than statutory notice, and whether the employee has normal working hours or not.
For any period of notice which exceeds the minimum statutory requirement, the terms of the contract of employment would need to be considered.
Employers in a redundancy context may often be inclined to pay in lieu of notice. However, there does not appear to be any mechanism for employers who dismiss and pay in lieu of notice to reclaim the PILON payment under the CJRS. It may therefore be financially preferable from the employer's perspective to keep employees on furlough for their notice period so that at least part of their notice pay can be recovered.
Rohan Solicitors LLP are here to guide you through any potential redundancies, both for employers and employees
For employees we can provide advice as to the terms and effect of draft settlement agreements provided by the employer. We can also assist if a claim to an Employment Tribunal is anticipated.
For employers, we are able to provide step by step assistance to ensure the required redundancy process is carried out in a fair and time-sensitive manner. We can advise as to voluntary redundancies and provide draft settlement agreements where applicable.
Please get in touch with our Employment team on 01444 450 901 or email email@example.com, for further information.