Following the Prime Minster’s announcement on Sunday night and with hopes that further easing of lockdown measures can be achieved over the next couple of months, many employers are turning their thoughts from furlough to how best to shape their business to ensure long term sustainability.
This often raises difficult questions about the best way in which to reduce the costs of your workforce and we’ve been advising on the different ways in which this may be achieved:
Maximise the use of furlough: With the announced continuation of the furlough scheme from 1 July, employers have some further certainty. By continuing to take advantage of this scheme redundancies may be avoided or delayed. Details are awaited of ways in which employees may be able to partially return to work whilst furloughed and we’ll circulate more details once we know them. It’s worth knowing that employers can also require that employees to use up part of their annual holiday entitlement during the furlough period – subject to providing the correct notice (twice as much as the period of leave to be taken) and ensuring that pay during holiday periods is topped up to 100% of salary. This may be worth considering where money is extremely tight and redundancies may be inevitable in due course.
Consider changing terms and conditions of employment: It may also be appropriate to consider making changes to employment terms and conditions to ease pressure on the business in the longer term. This could be temporary, for example, periods of unpaid leave, a short term reduction in salary (with or without a corresponding reduction in working hours) or suspension of benefits. Otherwise a permanent change could be sought, for example, indefinite salary or benefit caps, increased scope of duties or reduced holiday entitlement. Ideally, any change should be agreed with each individual employee affected following a period of consultation. In some circumstances, if an employee doesn’t agree with a requested change it can be possible to force the change through my ending employment on the current terms and offering immediate re-employment on the new terms. Caution needs to be exercised to ensure the right balance of the business sense behind the change, consideration of the employee’s objections and that correct notice is served.
Lay off and short-time working: where there is a contractual right to do so, employers may lay off employees or put them on short-time working where it is anticipated that workloads may pick up again in the relatively near future. Employees who have been laid off or put on short-time work for either 4 consecutive weeks or any 6 weeks in a rolling 13 week period, can give notice to their employer that they wish to be made redundant and to receive a statutory redundancy payment. To give more flexibility, some employers are considering changing terms and conditions (see above) to introduce the right to lay off or impose short-time working to provide additional flexibility in the future.
Redundancies: sadly, the economic impact of the coronavirus is likely to result in many employers considering staff redundancies. To avoid the risk of an unfair dismissal claim, employers should follow a well worn path of formal consultation (at least 2 individual consultation meetings to discuss the proposals before any decision is taken and the use of objective selection criteria if choosing employees from an appropriate pool). Without employees in the workplace this does present some practical challenges, but it’s a process which should be followed as far as possible. For staff with less than 2 years’ service it may be possible to follow a slightly truncated procedure although care must always be taken to avoid any suggestion of discriminatory treatment. Employers must be alert to the numbers of employees who may be redundant. If it’s 20 or more, collective consultation rules apply – with significant financial and criminal consequences for non-compliance. Timing wise, redundancy consultation can be started whilst an employee is furloughed, although if the collective consultation applies the appropriate 30 or 45 day consultation period must run before the first dismissal takes effect.
Of course, this only provides an oversight of the options available to employers in this difficult situation. We would urge employers to properly consider all options and to take advice on how best to apply those options to their specific workplace.
If you need any guidance please get in touch with Tiggy (07943 842404) or Emma (07912 395695) or drop us an email on email@example.com