1. How do I know if I need to make redundancies?
Having to make redundancies is a difficult decision, and should be a last resort.
It will be case specific to each business, but typically, redundancies are necessary where a workplace needs to close indefinitely, a job no longer exists or the need for a role or skills has diminished, including where new systems are in place.
The need to make redundancies is often underpinned by financial restrictions and a requirement to reduce internal operating costs.
2. Can you start redundancy consultation whilst employees are on Furlough Leave?
Yes you can commence redundancy consultation whilst employees (affected or not) are on Furlough Leave. Although, do consider if you can wait a little longer to commence the process and utilise the Furlough Leave scheme longer whilst it is available. Your business circumstances may improve during this time, providing the opportunity to retain people in their roles and employment.
If an employee is made redundant during a period of Furlough Leave, their notice pay can coincide with Furlough Leave, but will need to be paid at 100% pay. You can claim 80% of the notice costs under the Coronavirus Job Retention Scheme.
If you have staff on Furlough Leave and their roles are at risk of redundancy, then you cannot make just those individuals redundant. You will need to ensure any other individuals who fall into your pool are included in the process and selection. They may be working or otherwise not on Furlough Leave.
This will ensure meaningful and objective selection has taken place as it is likely when deciding who to place on Furlough Leave, the selection exercise was not as rigorous as is required for a redundancy situation.
3. What are the best tips to ensure a fair process is followed?
Regrettably, a higher number of roles may be at risk of redundancy due to the effects of COVID-19 on the business community. To ensure the whole process is handled as fairly as possible to mitigate any further risk to your business, ensure the following:
- You have established that there is a genuine redundancy situation and this is a last resort.
- You have taken steps to avoid the redundancies.
- You have decided on your proposed selection pool(s), selection criteria and compiled a list of vacancies.
- You have made an initial announcement (as a group) about the proposed redundancies, at this stage you may also ask for volunteers.
- You have included any relevant staff on family or sick leave.
- You have informed those individuals that they are ‘at risk’ of redundancy and formally invited them to a first individual consultation meeting with the right to be accompanied.
- A trained manager has scored each potentially redundant employee using the selection criteria and scoring guidelines. A second manager has checked the scoring.
- You have informed those individuals that they are at risk of redundancy and formally invited them to a consultation meeting. They have been given the right to be accompanied.
- ‘At risk’ employees have been consulted with about the proposed redundancy and any vacancies or alternative employment. A meaningful discussion takes places, including how the redundancy can be avoided.
- You have reviewed any necessary scores and followed up any outstanding actions.
- Following a second consultation meeting, if nothing has changed, confirm redundancy and offer affected employees the right of appeal to a more senior manager.
- Confirm any decisions in writing, explaining any calculations for redundancy payments.
4. How do you avoid making redundancies?
Making anyone redundant should be a last resort, so ensure you have fully considered other options available to your business. This could include:
- Stopping recruitment or deferring new starters.
- Reducing or stopping other overhead costs in the business.
- Implementing overtime bans.
- Exploring if employees will consent to short time working; part time working; or flexible working.
- Review bonuses and other benefits.
- Explore if employees can take holidays or unpaid leave during this time.
- Are the skills of those at risk transferable to other areas of the business?
5. How long does a redundancy process take?
- If you are proposing to make 20-99 or more employees redundant at one establishment in a 90 day period, then you must consult with them for at least 30 days before the first dismissal takes effect. Where the employer proposes to dismiss 100 or more employees within a 90-day period, you must consult at least 45 days before the first dismissal takes effect where the employer. This is known as ‘Collective Consultation.’ This includes having a planned process, complying to the statutory timescales, electing representatives or liaising with a recognised trade union to collectively consult with; and informing the Department for Business, Energy and Industrial Strategy (BEIS) of your plans, via the Redundancy Payments Service using form HR1.
- If you are proposing to make less than 20 employees redundant, then you must follow a reasonable process. There is no guidance on timeliness, but subject to the specific case, the process can be concluded in 1-4 weeks.
6. Can you do it any quicker?
You need to consult as reasonably practical in your circumstances. You must endeavour to meet any statutory time lines. In special circumstances, you may be able to avoid statutory time lines however there is little definition on what ‘special’ looks like. It is reasonable that this could apply if you have to shut down your business in a limited time frame. However, you should take legal advice before considering deviating from the legislation on redundancies, as the penalties for failing to undertake collective consultation are significant, protective awards are subject to a maximum of up to 90 days’ pay.
7. How do you know who is at risk?
You must identify an appropriate pool to select potentially redundant employees from, who are then selected against proper and objective criteria. To help you identify your pool, consider:
- What type of work is ceasing or diminishing.
- The extent to which employees are doing similar work, possibly even those at other locations and the jobs they do that is not in their contract. What tasks do they do in practice?
- The extent to which employees’ jobs are interchangeable.
Consultation will take place with all employees in the pool. Employees and their representatives should be given the opportunity to comment on the pool and selection criteria.
8. Can I put just one person at risk?
Yes, provided there is only 1 individual in the pool. They will likely be the only person that can and does perform the tasks that that role carries out.
9. How do you shortlist and select staff in the pool?
Selection criteria should be as objective and measurable as possible, with evidence where applicable. Commonly used criteria is:
- Performance and ability.
- Length of service (note this cannot be used on its own as a criteria).
- Attendance records (which is non-disability or pregnancy-related).
- Disciplinary records.
10. What is an employee entitled to if they are made redundant?
Provided there is no suitable alternative employment employees will be entitled to receive:
- The greater of their statutory or contractual notice;
- A Statutory Redundancy Payment if they have more than 2 years’ service;
- Any accrued but unused holidays at the date of termination; and
- A reasonable amount of time off work before the end of their notice to look for new employment (if they have at least two year’s notice by the date their notice is due to expire)
Please note that this guidance note does not constitute advice, if you have a specific issue please seek advice from LoatesHR prior to implementing the proposed redundancy.
June 2nd, 2020