July 28, 2020

How the Job Retention Scheme Affects the Redundancy Process

Many employers have taken advantage of the Coronavirus Job Retention Scheme (CJRS) in order to retain their employees during the COVID-19 crisis. But the scheme ends in October, leaving lots of businesses wondering: what next?

For some, it’s onward and upwards and furloughed staff will return to business as usual. However, others will be contemplating making redundancies.

How does the CJRS scheme affect the redundancy process? Can staff be made redundant because they have been on furlough? And should employers be using the new, flexible furlough scheme before contemplating the redundancy process? For advice on this complex area, keep reading.

Some Background

The COVID-19 pandemic has significantly affected businesses. One of the support measures introduced by the Government to assist businesses through the pandemic was the Coronavirus Job Retention Scheme. The primary objective of the scheme was to ensure job retention during a very difficult set of circumstances and a period of uncertainty.

Many employers are likely to be faced with the possibility of having to make redundancies at some point, either during the course of the CJRS or when it comes to an end.

Redundancy is potentially a fair reason for dismissal, providing that it is reasonable in the circumstances.

A redundancy process typically requires the following:

  • A genuine redundancy situation exists
  • The employer warns and consults with its employees
  • They follow a fair selection procedure
  • They actively consider suitable alternative employment as a means of avoiding redundancy dismissals

Redundancy and Furlough

Staff should not be selected for redundancy solely because they are on furlough. Doing so may give raise to discrimination claims in addition to unfair dismissal claims. For example, dismissing a selection of staff placed on furlough because they are shielding for health reasons.

It’s not uncommon for claims to the Employment Tribunal to include challenges based on whether a genuine redundancy situation exists and whether the dismissal could have been avoided through other means. The fairness of a redundancy dismissal depends on the circumstances at the time. It is not necessarily unfair to make redundancies when furlough is available.

However, during the two phases of the CJRS, the second phase being flexible furlough, it is arguable that by utilising the CJRS the employer should be able to stave off the need for redundancies whilst the scheme is in place. An employer who fails to do so, or at least give serious consideration to that possibility, may find a redundancy dismissal in these circumstances held to be substantively unfair.

Collective Consultation

Employers facing the prospect of having to make redundancies should also bear in mind the collective consultation provisions which are triggered when an employer is making 20 or more redundancies in a 90-day period. These provisions can be rather complex.

Redundancy Pay

Note that if you do make a furloughed employee redundant, their redundancy pay is protected. This means they are eligible for redundancy pay based on their normal wages – not the furlough rate. This is effective from 31 July 2020.

Next Steps

Employers contemplating redundancies should proceed with caution and advice. Moorepay’s HR customers can contact our Advice Line team 24/7/365 for advice on how to approach the redundancy process.

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About the author

Sonny Jagpal

About the author

Sonny Jagpal

Sonny has worked in employment law and advocacy for over 11 years. He is experienced in providing advice, conducting litigation and representation in Employment Tribunals. At Moorepay Sonny works within HR Services as part of our Advocacy team, providing services such as case preparation, conducting litigation and representing our clients in Employment Tribunals.

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