The Coronavirus Job Retention Scheme has been a life saviour for many businesses and without it many would not still be trading today. However now that the Government has made its long awaited announcement about the winding down of the furlough scheme, many businesses will be looking towards their future capacity, their workforce requirements, and will be putting in place their redundancy plans.
The government will continue to reimburse employers up to 80% of furloughed employees’ salaries up to a maximum of £2,500 per month, plus national insurance and pensions contributions, until 1st August, when employers will need to cover NICs and pension contributions, and the last date on which employees can be placed on furlough for the first time is tomorrow, 10th June.
The fact that the scheme is being scaled back more gradually than expected will be welcome news for many.
Employers should therefore be considering, if they have not already, what their workforce needs are likely to be once the lockdown and the scheme end and planning accordingly. As we have seen with British Airways, it is perfectly permissible for employees to "work" their notice periods whilst on furlough which could save forward thinking employers substantial sums.
This will be a difficult time for many businesses, and how employers approach redundancies is key to avoiding claims of discrimination or failure to properly consult. From the employer's perspective, a proper redundancy consultation and selection process should be followed. Employees are entitled to expect that as a matter of law and in any event invariably the whole process is more efficient and less expensive if done properly. Cutting corners can lead to employment tribunal claims that might otherwise have been avoided with all the cost and inconvenience those bring with them. Employees of almost all businesses in Scotland should be expecting redundancies and can easily find online what their rights are.
Timing, as always, is crucial. If the employer is proposing to dismiss 20+ employees in a 90 day period, they will need to collectively consult with representatives of the affected employees for at least 30 days before the first of the dismissals take effect (45 days if 100 or more dismissals are proposed). Consultation should therefore start before definite decisions about redundancies have been taken.
Employers will need to give careful consideration to who is in the pool of potentially redundant employees. Certain groups (e.g. women or those who are classed as being in the coronavirus vulnerable category for health reasons) are more likely to have been furloughed due to childcare or medical reasons, which could lead to claims for discrimination.
Usually it is best to offer to employees who are to be made redundant an enhancement to some degree of their statutory or contractual redundancy entitlement as an incentive to enter into a written settlement agreement. Such an agreement brings certainty and finality to the situation for both employer and employee and allows both to move on. That must be in a prescribed form and most importantly the employee must receive advice from an independent solicitor who signs a certificate to confirm they have provided that before it is legally binding.
Our employment team is available to help both employers and employees through the difficult period to come, whether that be advising on redundancy consultation and selection processes for employers or employees, drafting or advising on settlement agreements or just providing general advice on issues that arise.