Redundancy and Furlough

It is expected that at least a quarter of UK employers will make some form of redundancies as a result of the current pandemic.

The Coronavirus Job Retention Scheme (CJRS) was implemented to avoid businesses making redundancies as a result of the current pandemic, with the overarching purpose of the scheme to save jobs and protect the UK economy.

The guidance seems to indicate that employees may be made redundant while on furlough, or afterwards;

The note for employees states ‘your employer can still make you redundant while you’re on furlough or afterwards’ and

The note for employers states ‘when the government ends the scheme [employers] must make a decision, depending on [their] circumstances, as to whether employees can return to their duties [and] if not, it may be necessary to consider termination of employment (redundancy)’.

The Guidance is clear that, whilst on furlough (and afterwards), employees still have the same employment rights; in relation to redundancy rights and protection from discrimination or unfair dismissal.

It is therefore crucial that employers only implement redundancy dismissals where:

  • there is a genuine redundancy situation, and
  • they have followed a fair redundancy process in line with UK employment law.

The availability of the Coronavirus job retention scheme and other government support packages available does add another layer to the normal redundancy process:

  • Employers must always show they tried to avoid redundancies – proceeding without considering current government measures in relation to coronavirus measures as alternatives, such as placing employees on furlough, may encourage employees with over two years’ service to present unfair dismissal claims;
  • The usual redundancy processes must be followed – this means following the company’s own procedure (if there is one in place) and the stages defined in UK employment law;
  • Employers who have already furloughed employees can still start the redundancy process, once all other alternatives have been exhausted.

When looking at the selection of employees for redundancy, automatically selecting employees purely on the basis that they have been furloughed could be problematic for a number of reasons:

  • Looking at how the employees were selected for furlough to begin with? What was the process and criteria used, and whether these were fair in the circumstances and remain fair? It’s likely that at the point redundancy becomes necessary, an employer would have to reassess the fairness of pools and selection criteria and consult employees, to ensure that any redundancies are not deemed unfair;
  • Employers need to review if the employees are on furlough due to caring responsibilities, or are shielding for health reasons? Selecting these employees for redundancy is likely to constitute indirect discrimination based on sex, disability or age;
  • There remains a grey area around the question of whether selecting someone for redundancy when they could remain on furlough may result in unfair dismissal. Employers need to consider whether it would be reasonable in the circumstances to wait until the furlough scheme ends, and the company is no longer able to claim employee costs under the scheme, before implementing any redundancies.

Some additional considerations for businesses include:

  • Logistical issues – so how will you communicate with the affected employees? Can the consultation process be conducted remotely? Do all the affected employees have the equipment and skills to participate in a digital process;
  • How is the business proposing to select employees for redundancy? Is this based purely on the fact that they are furloughed? If so, there is a risk (depending on the reasons for employees having been placed on furlough in the first place, and the selection process that was used to do this) that the approach may give rise to claims of discrimination and unfair dismissal;
  • Where an employer could have retained an employee on furlough, a redundancy dismissal may be deemed unfair;
  • Employees may be entitled to be paid their full salary during their notice period (and for any annual leave taken during their notice period) even if they have only been receiving the 80% of pay whilst on furlough leave. It is advisable to seek specialist advice on the point. Clover HR are available to help where needed.

This situation we are in is unprecedented, but employers who decide there is no alternative to redundancies still must follow a normal and fair redundancy process. It’s important to remember new government guidance is being published regularly during the pandemic, and therefore it’s important businesses to keep matters under close review.

If you would like further guidance or support on this matter or require advice on other people management matters please contact Clover HR on 0121 516 0299 or email us at info@cloverhr.co.uk

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