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Category: Employment


Published: 25 March 2020

Redunancies during the outbreak

 

REDUNANCIES DURING THE OUTBREAK

 

REDUNDANCY RULES APPLY EVEN WHEN THE VIRUS STRIKES  

The unprecedented nature of the Covid-19 outbreak leaves many employers facing decisions that they never wanted to make – whether they can afford to keep the same number of employees, or redundancies will be required. 

In one sense UK employment law recognises the right of an employer to protect the business by cutting costs in an unforeseen situation– the test of what amounts to a redundancy situation is not a high one to overcome. 

The employer does not have to go as far as closing down a particular branch or a trading area – they can have a redundancy situation even if they can show that the requirement for people to carry out work was “expected to diminish”, even if it’s for a limited time.

However, the second legal hurdle which the employer who wants to implement redundancies must cross is to show that the process was a fair one – this generally is more difficult to establish.

In the half-century that the Employment Tribunals have been hearing these type of cases, the concept of ‘fair process’ has been developed into mini-checklist of points which, if they go unanswered, can invalidate the whole process.

These include:
-       Was the employee consulted and given a proper warning?
-       Was the information given in the consultation accurate?
-       How did the employer decide which roles were going to be considered for redundancy and which were not?
-       What criteria did the employer use when comparing the performance of different employees?
-       Did the employer look at alternative roles?
-       Were any suggestions made by the employee looked into by the employer?

Added to that checklist now is whether the company has considered using the Government’s announcement of a Job Retention Scheme, which sees the taxpayer meeting 80% of wages of those who are kept on as employees although not working, as an alternative to redundancy.

Other methods of achieving savings, such as a reduction in working hours, should also be something that the employer should be prepared to look at.

There are further mandatory steps that have to be carried out where more than 20 people are being let go at one time – and the penalties for non-compliance are substantial, with the Tribunal being able to order payment of up to 90 days pay per employee. 

The only situation where the fair process points start to become irrelevant is where the business is going to fold – as in that situation, consultation is usually somewhat irrelevant. 

An insolvency situation means there will not then a company there to pay any awards the ET imposes, which the taxpayer then will have to meet. But this not a route that company directors can have a blithe attitude to – there are a separate set of rules which impose penalties where there has been  insolvent trading or other breaches, and these can include a ban on being a director again.

To find out more, contact Stephen Smith, associate in our Employment team, at This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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