Redundancies – The Impact of Coronavirus
Blog | 6th July 2020
The thought of losing your job is tough at the best of times. But it is exceptionally hard during the current economic uncertainty caused by Coronavirus.
Despite the Chancellor’s introduction of ‘flexible furlough’ which came in on 1st July and the extension of the furlough scheme until the end of October, we’re likely to see a spike in redundancies in the coming months not least as from August, as businesses will be expected to pay national insurance and pension contributions for furloughed employees whilst battling to recover from the pandemic.
Whilst making furloughed employees redundant is allowed under the rules of the scheme, subject of course to the usual redundancy process being carried out fairly, it’s good practice for employers to inform all employees that there is a risk of redundancy and for those at risk of redundancy to be consulted by their employer to explore means to avoid their role becoming redundant. Businesses will need to look at redundancy selection pools, selection criteria and genuine and proper consultation with all individuals who have been placed ‘at risk’ of redundancy. Where there is likely to be 20 or more redundancies in any establishment, then employers will be obliged to collectively consult with staff.
In some cases employers may offer enhanced payments in addition to the statutory redundancy and notice pay. This is often the case where employers offer voluntary redundancy packages to staff. Employees that fall into this category are usually offered a settlement agreement. Such agreements are legally binding and can replace the need for any redundancy process, disputes and tribunals and often achieve closure very quickly for both parties. By entering into a settlement agreement the employer need not manage a redundancy consultation process although it is important that before an employee accepts any offer made by their employer, they negotiate the terms of settlement to achieve the best outcome possible. Once an agreement is signed by the parties, the employee waives their right to make any claims against the company, such as for unfair dismissal or any claim that they have suffered discrimination.
Employees are required to seek independent legal advice before entering into a settlement agreement and ACAS guidance suggests a period of around 10 days for an employee to seek advice and consider the terms of the agreement. A contribution to the employee’s legal fees is usually made by the employer.
Despite the current difficulties around COVID-19, with adaptions to our usual service we can assist you through this process. For employment law help and advice contact Sarah Collier, Head of Employment on 01204 527777 or firstname.lastname@example.org.