Help and advice with a redundancy process
Due to the devastating impact that COVID-19 has had on our economy, many predicted that businesses would be facing difficult decisions with regards to how they would be able to manage to retain staff whilst revenue dropped. The government furlough scheme has bought many businesses some time but back in May we posted a blog with points for employers when considering redundancies.
Since then, there has been clarity from HMRC that employers can use the furlough scheme for staff who are served with notice of redundancy. There have also been regulations confirming that redundancy calculations should be based on employee’s normal pay (with the statutory cap still applicable) and not with reference to their reduced ‘furlough’ pay, although many employers were already doing this. As was made clear from the start, the furlough scheme cannot be used to claim back statutory redundancy payments.
Sadly, there will be further redundancies to come, especially in the leisure, travel and hospitality sectors despite the furlough scheme. There have been calls for more help for the leisure and hospitality sectors, although there does not appear to be any appetite to extend or expand the furlough scheme, even if only for specific sectors. It is also claimed that the most vulnerable are more likely to be selected for redundancy. With all this in mind, employers preparing for redundancies will be mindful of the need to ensure they follow a fair redundancy process.
Employers are advised to seek legal advice before embarking on a redundancy process but a few additional tips for employers to consider are as follows:
- Look carefully at your groups, or ‘pools’ of employees when considering who may be ‘at risk’ of redundancy – consider not only what their title is but what they actually do day-to-day.
- Do not forget about accrued untaken annual leave – this could be an extra cost that employers sometimes forget about. Can your staff use up this leave or will it be accrued and untaken on termination? Best to plan ahead so you can give appropriate notice if you are wanting your staff to use up their holiday entitlement.
- Managing the shock of a redundancy process – consultation can cover more than just looking for alternatives to hopefully avoid the redundancy situation. It can also help to inform the employee about what the process looks like, how long it’s expected to last, and how the redundancy calculations are worked out if employees are made redundant. Employees often ask what they would be entitled to if they are made redundant.
- Check your employees’ contracts of employment but also their years of service – the contract you are using for your staff may be out of date or incorrect so may not reflect the correct notice period. Employees are entitled to statutory minimum notice periods as follows:
- An employee who has been employed for more than one month but less than two years is entitled to at least one week’s notice of termination.
- Where the employee has been employed for more than two years but less than 12 years, they are entitled to one week’s statutory notice for each year of continuous employment.
If the contract states they are entitled to less than the statutory notice period above, the correct statutory notice will apply.
If you require advice on any aspect of a redundancy process or would like some guidance to take you through a process from start to finish, we are here to help.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published