- With the ongoing economic impact of coronavirus, many businesses may soon have no other option than to make employees redundant. Here’s what you need to know
The furlough scheme has proved to be a lifeline for many businesses – avoiding the need to lay staff off immediately once work dried up and car showrooms were ordered to close as a consequence of the ongoing coronavirus crisis.
However, with work unlikely to return immediately, many dealers will be facing redundancies, with dealer groups already warning of mass job cuts.
It’s something no company ever wants to do, but with the choice of keeping a company afloat or making staff redundant, it’s one many might have to make.
With the help of Kiril Moskovchuk, legal adviser at Lawgistics, here’s everything you need to know about redundancies…
Are redundancies the right decision?
This is one that’s obviously down to individual circumstances. However, with reduced demand likely, they are inevitable.
Moskovchuk said: ‘The furlough scheme certainly prevented mass job losses for the time being but when the scheme ends, it is doubtful there will be enough business to maintain the staffing levels as they were before the lockdown.’
How do you select people to be made redundant?
The key thing to note here is that you need to select the job roles that are redundant, and not the people themselves initially. It is something that might be difficult to do – especially if you have a small team.
These job roles should be placed in a redundancy pool, and then there is something known as the ‘redundancy matrix’ to work out which employees should be selected.
Essentially this is criteria, which could include job performance, their disciplinary record and qualifications, to work out which employees will be made redundant. Workers affected should be consulted throughout this.
Moskovchuk gave an example: ‘A garage, say, has three mechanics but there is only enough work for just two. However, if one of the mechanics is persistently underperforming, then all three mechanics should still be placed in redundancy pool and the performance should be one of the selection criteria for redundancy.’
But if there is just one person in a job role, there is obviously no need to have a ‘matrix’, but the steps of identifying jobs that are redundant still remain the same.
What are the next steps for redundancies?
Once an employer has identified the redundant jobs, they then need to announce to those potentially affected that their jobs are under threat – explaining the reason, the redundancy pools and the criteria set out. At this stage, no jobs are redundant, and no single person will definitely be made redundant.
Following this is what’s known as the start of the consultation period, where an employer should consider alternatives to redundancies, listen to proposals from workers and ensure that those at risk are kept in the loop.
For small scale redundancies, there is no set minimum period, though rules are more detailed for companies that are making at least 20 employees redundant. Moskovchuk added that the process should be ‘fair and meaningful’.
Decisions should only be made once the consultation period is over.
What notice and pay do I have to give to those that are being made redundant?
Once a decision has been made, the notice length will vary depending on employing contract and statutory minimums.
These are at least a week’s notice for those employees that have been at the company for between a month and two years; a week’s notice for each year they’ve been employed (up to 12 years); 12 weeks’ notice if employed for 12 years or more. Pay could be given in lieu of notice, though.
Next comes the payment, which includes the redundancy payment (statutory or contractual), as well as payments for accrued but unused holiday and notice pay. It will vary massively depending on job, and the time served.
Employees will get half a week’s pay for every full year they were under 22, a week’s pay for full years when they were aged between 22 and 41, and a week and a half’s pay for each full year when aged 41 and older.
Weekly pay is capped at £538, and the maximum statutory pay is £16,140. The length of service is also capped at 20 years. Exemptions will apply.
Can an employee be made redundant while furloughed?
Yes, the procedure of making someone redundant can be carried out if someone is furloughed.
However, Moskovchuk added: ‘But if the employee is actually made redundant in the middle of the furlough, not at the end of it, this may be open to a challenge.’
What happens if correct procedures aren’t followed?
Redundant workers may bring a claim forward to an employment tribunal if correct steps weren’t followed.
Moskovchuk says this is particularly true regarding whether redundancies were ‘necessary’ and also that workers weren’t ‘unfairly selected’. Typically an employee needs two years of experience to bring a claim forward, though not always.
Lawgistics used this example: ‘For example, a sales assistant may argue that she has a chronic health condition, which makes her vulnerable to the coronavirus. She was selected for redundancy because she raised a concern about implementation of social distancing in the workplace.
‘Here we may have two grounds, discrimination and health and safety, when a claim may be brought regardless of the length of service.
‘In view of the pandemics, the tribunals may show leniency when an employee did not manage to bring a claim within the prescribed time limits.’