14th May 2020

Redundancy during Coronavirus Part 5: FAQ’s

In parts 1 – 4 of our series of blogs, we looked at how a redundancy situation might arise, through consultation procedures (individual and collective), and covered calculation of redundancy payments. In this final part of the series, we will address some frequently asked questions. Some of the FAQs will look at the interplay between furlough leave under the Coronavirus Job Retention Scheme (CJRS) and redundancy.

Does an employee have to be at risk of redundancy to be eligible for furlough under CJRS?

No. While Chancellor Rishi Sunak, when announcing the scheme for the first time, spoke about assisting employees who would otherwise be made redundant, it is now apparent that the availability of the scheme is wider than that. The Treasury direction makes clear that a furloughed employee is someone who is furloughed by reason of circumstances arising as a result of coronavirus or coronavirus disease. This is wider than just a redundancy scenario.

How can employer decide who to select for furlough?

Remember that an employer must comply with employment law obligations, generally meaning they must seek agreement with any employee before placing them on furlough. Selection can be done based on asking for volunteers. Too many, or not enough, might come forward. Our view is that an employer does not have to go through the full gold standard redundancy scoring procedure with matrix criteria and pools for selection, particularly so if the requirement to place people on furlough is a matter of urgent necessity owing to financial pressures. Consideration might also be given to prioritising employees who are in vulnerable categories, or who have disabilities, by way of reasonable adjustments.

If employees refuse to agree to be furloughed, would they then be redundant?

Not necessarily. Furlough can be as a result of many coronavirus related impact factors. For example, an employee might be shielding, in a situation where their employer remains busy. That employer might opt to furlough the employee even although they are not in any danger of redundancy. However, in many cases, furlough will have been used as a saving grace to keep a person, who would otherwise be redundant, employed.

Can an employer consult about proposed redundancies while an employee is furloughed?

Yes. This was an issue of particular concern to many large employers back when the CJRS was initially open until 31 May 2020. Large employers, proposing large scale redundancies, will have statutory obligations to collectively consult at least 30 or 45 days before the first redundancy takes effect. Prior to the CJRS being extended to 30 June 2020, many large employers were mindful that they would potentially require to commence collective consultation prior to the closure of the scheme (so as to correctly time their consultation period to end concurrently with the closure of the CJRS). Note however, that in contrast to consulting about redundancy during a period furlough, actually making someone redundant (i.e. dismissing as opposed to merely consulting for timing issues) during a period of furlough might be met with the suggestion that it would be reasonable for the employer to wait until at least the end of the CJRS.

How should an employer select for redundancy during periods of furlough?

The CJRS does not displace the usual requirements of a fair redundancy process, covered in parts 1 – 3 of this series. Employers who have a mixture of furloughed and non-furloughed workers will need to be careful, if moving towards redundancies, not just to select the furloughed staff for redundancy. This is likely to be unfair, particularly if no meaningful selection process took place before selecting for furlough. This approach would also carry discrimination risks, for example if the reason that the employee was furloughed was due to shielding related to a disability.

How can an employer consult during furlough?

Plainly, face to face meetings are not possible while lockdown remains in place. That will not absolve employers from their duty to meaningfully consult. Creativity might be required, perhaps leaning on technology. Many employers and employees are becoming experts at video meetings by various platforms such as Zoom, Microsoft Teams, Skype (and various other providers available). There is no reason why these platforms cannot also be utilised for redundancy consultations. If that is not an option for the employee, an employer might seek to agree to consultation by written correspondence.

What about an employer who is going through redundancy consultation and an employee suggests furlough as an alternative?

This is a difficult one. There is no obligation on employers to access the CJRS. It is a free choice. However, there is an obligation on the employer to meaningfully consult with any employee facing redundancy. A meaningful consultation must not just be a rubber-stamping exercise. For example, where an employee puts forward suggested alternatives, the employer should not merely sweep these under the carpet. They should be given proper consideration. Just like any other suggestion put forward by an employee, an employer will need to have a reasonable explanation for rejecting it. We predict this will be a topical issue for tribunals to grapple with whenever we start to encounter claims arising from coronavirus related workplace decisions.

If an employee is made redundant during a period of furlough, how should their notice pay be calculated?

If the notice period which the employer is required to give the employee mirrors statutory notice (i.e. one week of notice for every completed year of work up to a maximum of 12), out view is that notice pay should be paid at full contractual pay (not 80%). If however the contractual notice period for the employer to give to the employee is at least a week or more greater than statutory notice, it is arguable that notice pay should just be paid at 80%. For example, an employee with ten years’ service and a statutory notice period of ten weeks, but whose employer has to give them a three-month contractual notice period, might be caught but this rule. Note that this only applies to those who remain employed during notice periods. Any payments in lieu of notice would have to be at full pay.

Can employers claim statutory redundancy payments under the CRJS?

No. It seems that they can, however, claim for notice payments so long as they do not make payments in lieu (i.e. the employee must remain employed for the full notice period, albeit they would still be on furlough). Even if the employer has to pay notice at 100%, they can only reclaim at 80%.

We hope that you have found this series of blogs useful. If you are an employer we do hope that you will find these blogs interesting, but that you will not have to act on any of the content. If there is anything not covered within this FAQ that you would like us to address, please contact one of the team.

Jack Boyle, Director
Accredited by the Law Society of Scotland as a Specialist in Employment Law
Employment Law
Blackadders LLP




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