New figures show that more than 600,000 jobs have been slashed since March 2020. Thankfully, the job retention scheme has stopped the potential for a much steeper rise in unemployment figures.
Here at Emplaw Solutions, we have a grave concern that the inevitable reduction in government support will force employers to make many of their employees redundant. We have already seen a significant increase from businesses seeking advice on redundancy this week due to the reduction in funding available from the Covid-19 job retention scheme which will result in employers needing to contribute more to employees pay from August.
If you are considering making an employee redundant, the following guidance will help you. If you need help or advice with regards restructuring, redundancy or taking employees off furlough, please contact us on [email protected] - it is our job to protect your business.
Introduction
It is important that you make a position redundant, and not the employee. Redundancy is not a means to dismiss an individual in order to recruit another individual. When a company reaches the decision to make redundancies it is the final resort, having attempted or considered all other measures. Redundancies must be based on sound business reasons including financial, operational and technical. These examples constitute business restructure.
Even with CJRS and furloughed employees, many companies are now facing the challenge of ensuring business sustainability. In these unprecedented times we are still required to carry out restructure and redundancy in respect of UK employment law and legislation.
For a restructure and redundancy process to be lawful and in line with best practice, you must ensure that:
there is genuine business reason to carry out the process,
a matrix is completed to assess which jobs are at risk,
meaningful consultation takes place,
alternatives to redundancy are explored,
outcomes are finalised in a formal correspondence,
all accrued annual leave entitlement, notice pay and (where relevant) statutory redundancy pay are made,
final decisions are based on the matrix and business plan
Through these guidance notes we will explore these steps in more detail to help ensure you follow the correct procedure when making redundancies.
Genuine Business Reason and Restructure Plan
Prior to Covid 19, a genuine business reason was (one or a mixture of) financial, operational and or technical. The pandemic has closed some businesses, left others operating at lower capacity and substantially reduced gross profits, if not cut income off completely. Covid 19 and its effects falls under all of these genuine reasons.
The first step to completing a restructure is to review your business plan. Compare this with your forecast and employee structure and create a new business plan and employee structure that works with your anticipated income and service needs.
With your old and new employee structure you should be able to identify overheads for employees, how these have reduced in the new structure and what jobs are at risk.
The first step to completing a restructure is to review your business plan. Compare this with your forecast and employee structure and create a new business plan and employee structure that works with your anticipated income and service needs.
With your old and new employee structure you should be able to identify overheads for employees, how these have reduced in the new structure and what jobs are at risk.
Redundancy Matrix
The redundancy selection criteria should form the basis on which employees can be objectively and fairly measured. All employees at risk of redundancy should be assessed individually using a matrix form (attached).
The criteria are usually based on Work Performance, Skills/Competence, Disciplinary Record and Attendance (excluding maternity, caring or disability related absence). Additional criterion can be considered however all new criteria should be discussed with your HR advisor to ensure that all employment law and discriminatory factors have been reviewed.
Where only an area of your company is being affected by restructure, you can process a matrix form for just that area. If, however a number of areas are being considered, you can complete a form for all the employees in each area. This should give you a points-based list to help you identify which roles and employees may be affected by redundancy.
Where ‘stand-alone’ jobs have been identified as being at risk you may not need to complete a matrix as there may be no other roles of a similar nature to compare via the matrix. In these instances, there role is at risk due to the diminished need for that particular role’s skills and experience.
The criteria are usually based on Work Performance, Skills/Competence, Disciplinary Record and Attendance (excluding maternity, caring or disability related absence). Additional criterion can be considered however all new criteria should be discussed with your HR advisor to ensure that all employment law and discriminatory factors have been reviewed.
Where only an area of your company is being affected by restructure, you can process a matrix form for just that area. If, however a number of areas are being considered, you can complete a form for all the employees in each area. This should give you a points-based list to help you identify which roles and employees may be affected by redundancy.
Where ‘stand-alone’ jobs have been identified as being at risk you may not need to complete a matrix as there may be no other roles of a similar nature to compare via the matrix. In these instances, there role is at risk due to the diminished need for that particular role’s skills and experience.
Meaningful Consultation
Normally you would hold a group consultation to discuss the situation with all employees, or the employees in the affected areas. As a group consultation may be hard to manage given current social distancing restrictions and a number of employees currently furloughed, you can arrange to meet (remotely by phone or video call if necessary) with each individual.
The consultation process can be given a time period (for example a week or two) and following this, employees at risk would be invited to a second meeting to confirm them outcome of the redundancy process.
Where you are considering making fewer that 20 redundancies and these employees all have under two years’ service you can, if necessary, invite them for consultation and at the end of the meeting, if no alternative employment or arrangement can be found, confirm the redundancy. If you have a mix of employees under and over two years’ service, or everyone has over two years’ service, you should hold one consultation meeting and a separate meeting to confirm the outcome of the process.
Where you have a time frame for consultation, or you are legally required to hold a second meeting (20 employees or more at risk), you would discuss the outcome in the final meeting when the consultation period has closed. If 20 or more employees are affected, the consultation process must take a minimum of 30 days before any dismissal is made.
Where you are considering making fewer that 20 redundancies and these employees all have under two years’ service you can, if necessary, invite them for consultation and at the end of the meeting, if no alternative employment or arrangement can be found, confirm the redundancy. If you have a mix of employees under and over two years’ service, or everyone has over two years’ service, you should hold one consultation meeting and a separate meeting to confirm the outcome of the process.
Where you have a time frame for consultation, or you are legally required to hold a second meeting (20 employees or more at risk), you would discuss the outcome in the final meeting when the consultation period has closed. If 20 or more employees are affected, the consultation process must take a minimum of 30 days before any dismissal is made.
To ensure the meeting is meaningful, you must:
Explain the business reason for the restructure
Discuss the matrix and future employee structure, and explain the criteria used
Go through the results of the matrix and provide supporting evidence, if available
Explore alternatives to redundancy, such as redeployment
Give the employee the opportunity to discuss their concerns and make suggestions
Offer voluntary redundancy, where applicable
Take minutes of the meeting
Redundancy Outcome Meeting
In the second meeting you should go over the following points:
Explain the business reason for the restructure
Discuss the matrix and future employee structure, and explain the criteria used
Go through the results of the matrix and provide supporting evidence, if available
Explore alternatives to redundancy, such as redeployment
Give the employee the opportunity to discuss their concerns
Take minutes of the meeting
Discuss the time frame, contract end date and the final payment
Confirm that a letter will be provided summarising these details and decision
Confirm that they have the right to appeal, where relevant
Unless the business is closing indefinitely, any employee made redundant will have the right to appeal the decision. Where possible, it is important to have someone else (another Manager or Director) consider the appeal who was not previously involved in the redundancy process.
Conclusion
Redundancy is something no company or employee wants to experience. Bare in mind that these drastic measures will hopefully in turn save other jobs and address the sustainability of the business.
When redundancies have been confirmed, the employee:
will be allowed reasonable time to look for alternative employment between now
and the date of dismissal (must be authorised)
will receive a letter that confirms the decision and details their final payment. This
will be accompanied with details of their right to appeal
If your employee is furloughed and will remain furloughed during their notice period, their 80% payment (until the end of August) through the CJRS can contribute to the notice period payments. You will however be required to ‘top-up’ this payment by 20% to ensure they receive 100% of their contracted salary during their notice period. This percentage will vary
depending on the months in which the notice period fall. Please see our guidance on the furlough changes 1st June for further details.
Where a contract ends and there is remaining notice that cannot be worked, the employee will receive payment in lieu of notice. This payment in lieu cannot be made through claimed CJRS funds.
Where a contract ends and there is remaining notice that cannot be worked, the employee will receive payment in lieu of notice. This payment in lieu cannot be made through claimed CJRS funds.