The government is gradually winding down CJRS, as businesses re-open across the country and employees are returning to work. Olivia Bailey, solicitor in Harrison Drury’s employment team, offers a recap on the restructuring process and shares some tips for getting it right.
With the recent government announcement that employers will receive a bonus for bringing furloughed staff back to work and retaining them to January, 2021, many businesses will be considering means of keeping their staff in employment.
However, the gradual winding down of the CJRS between now and October, 2020, will still lead to employers reviewing their team structures and for many, it will mean reorganising the workforce.
For those staff furloughed on or before 10 June 2020, they can be brought back into work part-time, covering such hours as the business requires. Employees will still be entitled to a minimum of 80% of their salary under the CJRS, prorated for the number of hours on furlough i.e. reduced proportionately by any hours worked.
However, from August, 2020, employers will be required to contribute to payments for employees whilst on furlough and by October, the CJRS will only cover 60% of employee wages, with the employer contributing the remaining 20%.
Sadly, some businesses will simply be unable to contribute to payments for furloughed staff and will have to consider restructuring and potential redundancies, despite the latest incentive to retain staff announced by the government. Below, we review the issues that employers should consider and how they can ensure that any redundancy process is conducted properly.
Is the definition of redundancy satisfied?
Where there is a ‘reduced requirement for employees to carry out work of a particular kind’ or a business closure or re-organisation that means fewer staff are required, it’s likely that a redundancy situation will have arisen and the definition of redundancy satisfied.
If this is the case, it is important to show that the business has explored other options to avoid redundancies. To go ahead with a redundancy process without first considering government support, may enable employees with over two years’ service to pursue claims for unfair dismissal.
Where employers have made use of the CJRS, they may look to commence the redundancy process, where other options have already been exhausted.
Have all alternatives been explored?
Organisations will have been implementing cost saving methods to reduce overheads, including suspending recruitment and capitalising on a reduced requirement for office space, given the possibilities of widespread homeworking.
Looking ahead, options that may assist in retaining staff include reduced working hours over the full working week or asking employees to agree to working fewer days per week, which will have a similar impact. By opening the discussion to all employees, you may find that there are volunteers for flexible working. The details of the furlough scheme bonus are yet to be announced, however, by exploring these options, it may be possible to benefit from this incentive.
What’s the process for making redundancies?
Where 20 or more employees are being made redundant over a period of 90 days or less, an employer has a duty to inform and consult employee representatives:
- If 100 or more redundancies are proposed, collective consultation must begin at least 45 days before the first dismissal takes effect.
- If between 20 and 99 redundancies are proposed, the consultation period is 30 days.
- Where the business is planning on making fewer than 20 redundancies, there are no formal time limits on the consultation process, but a fair procedure must be followed.
Businesses are also required to notify the Secretary of State where more than 20 employees are to be made redundant over a period of 90 days or less.
Once it is clear that redundancies are required, it’s important to consider the appropriate pool of employees, if selection is necessary, and establish an objective set of criteria under which selection will be made. Special rules apply in relation to any employees that are pregnant, or on family-related leave, and these should be identified at the outset.
How do I go about consulting with staff on redundancies?
Consultation involves meeting with employees that are at risk of redundancy as a group, to explain the reasons behind the redundancy process and to inform of how many jobs are at risk. At the initial meeting, you may wish to ask for volunteers for redundancy, to reduce the number of compulsory redundancies that will be made.
If collective consultation is required, employee representatives should be elected and consulted, or consultation with trade union representatives should take place.
Employees should also be consulted individually about their scores under the selection criteria, once this has been completed, and they should be informed of the proposal to select them for redundancy. If an employee is selected for redundancy, they should be invited to a further meeting prior to a formal dismissal letter being issued.
Once employees are aware that they have been selected for redundancy, they may wish to appeal and a process to allow for this should be made available.
Finally, those employees that have been selected will be made redundant with payment (if they have two years’ service) and should receive any notice or outstanding holiday period payments due.
The redundancy process requires careful planning and if you are now considering making redundancies, we always advise businesses to seek legal advice at an early stage, to ensure that all legal requirements are met and to avoid common mistakes.
These are difficult times and we are here to support you. Don’t risk exposing your business to potentially avoidable liability. If you have any concerns or questions at all regarding the CJRS, or regarding employment matters in general, contact Harrison Drury’s Employment and Regulatory Team on 01772 258321.