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Furlough and redundancy: key considerations

Posted on: April 29th, 2020 by Ginny Hallam

The purpose of the Coronavirus Job Retention Scheme is to do just that – support businesses to retain jobs and employees throughout the current crisis. With the Scheme in place until the end of June, redundancies might not be an immediate consideration.

Even with the support of the Scheme, some may be left with no choice but to consider redundancy. We look at how furlough will impact those decisions and some of the key considerations you should bear in mind. Redundancy situations are challenging at the best of times (without the added furlough complexity), so you should always seek advice from your employment lawyer.

Do you need to wait until the Scheme ends to start redundancy consultations?

No – it’s up to you whether you want to continue to make use of the Scheme or to progress redundancy consultations immediately, although bear in mind:

  1. you’ll need to establish whether you should bring employees back off furlough to consult
  2. you need to apply a fair selection criteria which should avoid penalising anyone who has been furloughed
  3. you’re likely be to challenged on why redundancies are necessary as furlough could continue
  4. you won’t receive support from the government for any redundancy payments so you need to ensure you have to cash to make the payments

How do I ensure that my selection process is fair if some employees are furloughed?

Assuming you don’t have a redundancy policy you’ll need to:

  1. Agree selection criteria that can be applied to all
  2. Agree a calibration process with two managers
  3. Ensure selection criteria is as objective as possible
  4. Ensure you’re measuring employees based on a period pre-furlough
  5. Consider discounting any period of furlough from selection scores
  6. Disclose the employee’s score but not the break point
  7. Consult with the employee in respect of their score

It won’t be possible to meet with everyone in person to discuss their possible redundancy – how do we deal with that?

You can consult with ‘at risk’ employees over video or phone calls. You’ll still need to follow the same process as if we you were meeting in person (two clear days’ notice of the meeting, right to a companion etc). Employees can also be accompanied by a colleague or trade union representative who can join the video call or phone call. They should not be a furloughed colleague. Bear in mind that meetings may be recorded or others may be in the room without your knowledge so you’ll need to be clear at the outset whether or not this is appropriate.

Redundancy is a challenge, and managing the process alongside furlough adds another layer of complexity. There’s plenty more to think about in terms of redundancy payments, extended notice periods and pay, voluntary redundancy and statutory pay. If you’re considering your options, seek advice from your lawyer at the outset to ensure you’re putting your business in the best position possible.

Click here to access our Post-furlough Guidance Note (which includes further detailed redundancy guidance).

This update is accurate on the date it was produced (29 April 2020), but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.