Service: Business strategy

Topic: Coronavirus

Redundancy – Advice for businesses

By Deval Patel

29 Jun 2020

Since the UK voted to leave the EU, the economy has grappled with the unknown; combining this with the disruption caused by Covid-19, and many businesses and their employees have been left feeling vulnerable.

Unfortunately, these are not circumstances that can be planned for, which is why it is essential that employers remain flexible and open minded, especially when managing their operations and their teams.

Managing your workforce

For a variety of reasons, businesses are impacted by uncertainty differently. Some may be concerned with cutting costs and whether they can bring their furloughed employees back. Others may need to recruit employees with different skills to address the changing needs of the business, such as more digital expertise. 

For those businesses experiencing a downturn because of coronavirus or other factors, reducing headcount is the most challenging issues to deal with. Not only is this emotionally difficult, but employment law may constrain a business’s ability to do so. There are many factors to consider:

  1. Employees that have been with the business for less than two years have fewer statutory rights, unless their dismissal relates to protected characteristics such as age, race or maternity
  2. You may need to enter a full-scale redundancy process. Workers who have been there a long time could be entitled to a high level of redundancy pay - so this could end up being a very costly process
  3. If you have fewer than 20 employees, you need to follow a 'reasonable' consultation process, which includes consultation with the employees involved

Making difficult decisions

To help prevent redundancies the government introduced the Coronavirus Job Retention Scheme. The scheme is set to continue to run until the end of October, but employers will need to begin contributing from August.

With the government slowly releasing its support, many employers are facing the difficult decision of whether they can bring their furloughed employees back.

Getting it right

For businesses that have no option but to follow a redundancy programme, you need to ensure mistakes are not made. For example, discriminating against workers on the grounds of their age, even inadvertently - could result in it being taken to an employment tribunal.
Also, you need to be sure that redundancy is the only option. You don’t want to regret making key employees redundant, particularly if they have specialist skills or deep knowledge of the business.

Before undergoing any redundancy process, it is important to review your employment contracts to see if they allow you to impose layoffs. If not, you could consider reducing hours of your employees (although they are unlikely to agree to this course of action), take advantage of natural wastage (whereby employees that leave are not replaced), or consider alternative strategies such as selling part of your business.

Before heading down the path of redundancy, we advise that you seek professional advice. 

If you would like to discuss anything from within this article, or indeed have any other questions about employment law and HR, then please contact your relationship partner or Danny Owen, Commercial Development Manager, Mentor, on 07866 145330 or email: daniel.owen@mentor.uk.com

This article was adapted from a recent article released by Mentor. The company provides consultancy, advice and legal protection insurance and are experts in employment law & HR, health & safety and environmental management. 

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