Some employers are still ploughing ahead with redundancies, despite the significant help being offered to them by the government to get businesses through the coronavirus crisis.
We need to protect each other, our livelihoods, families and our economy by doing all we can to persuade employers to avoid making people redundant.
In this blog, we look at how to convince employers to keep their staff on the books with pay, even if there is no work, and if this isn’t possible, some options for those who find themselves under threat of redundancy.
The government’s recently announced job retention scheme is intended to avoid the need for redundancies and employers should take advantage of the scheme.
There is a financial incentive for employers to make use of the scheme as the government will reimburse employers for 80% of the wage of a “furloughed” employee (an employee who is still on the books, but is not working), up to a maximum of £2500 per month.
Where a company is being taken under the management of an administrator, government guidance makes it clear that the administrator will be able to access the job retention scheme and avoid the often large-scale redundancies that go hand-in-hand with insolvency.
Keeping good relations with staff will contribute to securing the future of the business when the crisis is over.
Given the choice between redundancy and furlough, many employees are likely to agree to be furloughed under the job retention scheme, making good relations between employees and employers easier to maintain.
However, if employers proceed with redundancies, they will expose themselves to legal claims and find that relationships are irretrievably damaged.
Where there is a lay off provision in the contract which may entitle the employer to send the employee home without pay, trade unions and individuals need to highlight the benefits of using the retention scheme instead. Please see our previous blog on furlough.
Trade union involvement will increase the likelihood of quick and widespread agreement on the best way forward for large numbers of employees, and help ensure that employer decisions relating to furlough are made in a fair and non-discriminatory way. If there’s no recognised union to sort this out on a collective basis, unions can still provide support and advice to individuals who need help deciding what to agree to, and help employers and employees secure agreement. Join a union
Where possible, employees and trade unions should use the requirements for meaningful information and consultation (under Regulation 20 of the Information and Consultation of Employees Regulations) to influence decisions being taken about the future of the business. This process provides an opportunity for employees and unions to persuade employers who may be considering redundancies to opt for the government retention scheme instead.
There are many sources of government support available to businesses to help them avoid making coronavirus-related redundancies. This includes support for deferring VAT payments, paying sick pay, business rate support and cash grants for some sectors, a business loan scheme, a corporate financing facility and protection from eviction for commercial tenants. Find out more from Gov.uk
An employer that proceeds with redundancies needs to show there is a genuine redundancy situation and should follow the usual redundancy procedure.
This means that where there are proposals to make 20 or more people redundant at a single establishment within a 90 day period or less, an employer is obliged to carry out a collective consultation process with a recognised trade union or other appropriate representatives (S.188 TULRA 1992).
Consultation should include exploring how to avoid dismissals, how to reduce the number of dismissals and how to mitigate the impact. Employers must provide specific information about the redundancies. For example, the reasons, numbers, the selection procedure and proposals for any enhanced redundancy pay.
There is a danger that employers will argue that the coronavirus crisis amounts to a “special circumstance” defence which allows them to avoid consultation as it is not “reasonably practicable”. However, the coronavirus situation is unprecedented, fast changing and individual circumstances would be key in whether the defence would apply. In addition, the government job retention scheme provides a financial cushion for employers which should ensure that most employers are able to conduct a consultation process. It therefore appears far from certain that an employer could successfully argue the “special circumstance” defence to avoid consultation at the moment. Even if an employer was successful in the “special circumstance” defence, they would still need to have taken all reasonably practicable steps to fulfil the collective consultation duties.
Even if an employer intends to make fewer than 20 people redundant, it has individual consultation obligations. Each employee should be invited to a meeting to discuss and be given information about the proposed redundancy.
If an employer has already made employees redundant, or dismissed them for any other reason, (since 28th February 2020), the government’s job retention scheme will still apply if the employer re-hires the staff. Therefore, employers should be persuaded to re-engage redundant staff wherever possible.
Making redundancies may give rise to significant costs and litigation risks for employers
If an employer fails to comply with the duty to collectively consult, redundant employees have a potential claim for a protective award in an employment tribunal. The maximum protective award is 90 days’ (actual gross) pay for each affected employee. When an employer makes large numbers of employees redundant and fails to consult properly, there is significant financial exposure for them.
When an employee is dismissed for redundancy, as long as they have been continuously employed for two years, they are entitled to a statutory redundancy payment. This payment is based on week’s pay, the worker’s age and how long they have been employed. Redundancy pay calculator enables individuals to work out what their entitlement would be.
There might also be entitlements to an enhanced redundancy payment under the contract of employment.
Failure of an employer to make a redundancy payment will give rise to a potential employment tribunal claim.
If there is not a genuine redundancy situation, or if employer has failed to follow a reasonable consultation procedure, an employee might also be able to bring a claim for unfair dismissal in the employment tribunal.
There is a possibility that where an employer chooses to make an employee redundant rather than “furloughing” them under the government scheme, an employment tribunal would find the employer had not behaved fairly over the dismissal. As outlined above, an employer has a duty to consult on ways to avoid redundancies. It’s arguable that failing to make use of the scheme amounts to a failure to comply with this duty.
Nearly one million people have made applications for Universal Credit in the first two weeks of the coronavirus lockdown. The Department for Work and Pensions is overwhelmed and struggling to process the applications. There is a risk that people who are made redundant will be thrown into poverty, debt and homelessness. The coronavirus crisis has extreme consequences for all of us. We all have a role to play in helping each other. So on behalf of all workers, we ask employers to play their part in our time of national need by protecting jobs as far as possible.
Anyone who loses their job should seek prompt legal advice from their trade union (or another source) on potential legal claims and limitation periods. This blog is intended for information purposes only and should not be relied upon as a substitute for legal advice.
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