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The threat of redundancy and how to prepare for your future

21 May 2020 Employment Law Garry Sutherland

As we start to see green shoots emerging and what the new normal will mean for business, it is understandable that many employees will be worried about the potential changes and significant threat to their future employment.

Companies are going to have to adapt their practices and procedures to suit the current situation, but will also need to ensure the practicalities around this and their business continuity and viability. This could potentially mean a cut in workforce, at least for the short term whilst the world gets back to normal. 

The Coronavirus Job Retention Scheme has seen an unprecedented take up by employers across the UK since it was announced by the Chancellor on 23rd March, and the extension will have delighted both employers and employees. It is however inevitable that once the scheme comes to an end, many private employers in the UK shall be making redundancies. The economic forecasts, even the most optimistic ones, all point to that. Employers will currently be considering what their workforce needs are likely to be once the lockdown and the scheme end and will be planning accordingly. 

All employees should currently consider:

  • whether it might be in their interests to volunteer for redundancy, or
  • conversely, how they can maximise their chances of not being selected for redundancy.

Many employees who are to be made redundant may be offered an enhancement to some degree of their statutory or contractual redundancy entitlement as an incentive to enter into a written settlement agreement. That must be in a prescribed form and most importantly as an employee you must receive advice from an independent solicitor before it is legally binding.

For employees who can afford to (and particularly those who are nearing retirement age), volunteering for redundancy can often secure a better package than would be available if the process is gone through and they are then selected anyway. 

Additionally, employees who are concerned that their employer may be doomed may also wish to secure and be paid an enhanced package by volunteering to go. Whilst the Government funded Redundancy Payments Office shall ensure that payments are made to employees of businesses that become insolvent and cease trading, they only make payment of the statutory entitlement with no enhancement and there is likely to be a considerable backlog that delays much needed payments.

The majority of employees of course want to avoid being made redundant - especially when the prospects of finding another job will no doubt be bleak. Employers will be looking for their employees to work with them to get through the crisis. That might well involve any or a combination of reduced hours, pay cuts, foregoing bonuses, taking on additional duties, re-training or job sharing. Employees should be willing to be realistic about their employer's financial position and as part of the redundancy consultation process to consider any of these or other cost saving measures that their employer wishes to explore. Bring suggestions to the redundancy consultation as to how your employer can make savings and make yourself relevant in the delivery of those savings. If possible, bring suggestions as to alternative income streams that your employer could tap into and make yourself relevant in the realisation of those income streams. Make yourself indispensable - or at least less dispensable than other employees who don't take such a pragmatic approach into their consultations.

Despite the unprecedented and challenging situation businesses are in, employees are entitled to expect a proper redundancy consultation process, and if you feel that this has not been followed you can of course raise an employment tribunal claim.

Our employment team is available to help both employees and employers through the difficult period to come, whether that be advising on redundancy consultation and selection processes, drafting or advising on settlement agreements or just providing general advice on issues that arise.

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