The latest British Chamber of Commerce Coronavirus Business Impact Tracker results reveal that the vast majority of businesses surveyed have furloughed a proportion of their workforce, and are awaiting funds from the Coronavirus Job Retention Scheme as payday approaches for many. Seventy-one per cent of survey respondents have furloughed staff, up from 66 per cent last week.
It is now essential that employers start to consider their furlough exit plans to help their business survive the crisis.
Steps to consider
As well as using the Coronavirus Job Retention Scheme, many employers have already taken steps such as:
- Recruitment freezes
- Revoke offers to new hire employees who have accepted an employment contract but not started work. (These will be entitled to paid notice of termination).
- Discretionary benefits cut back
- Fixed term contracts not extended
- Terminating independent contractors, agency or casual workers who are not employees.
- Asking employees to take paid holiday during self-isolation
- Agreeing reduced pay or reduced hours
- Giving notice to terminate an employee who has under two years’ service. (These employees are to be included in the threshold for collective redundancy consultation).
- Laying off workers without pay - it is essential to check contract clauses as laying off without an employee’s consent could lead to the employee claiming damages or a constructive dismissal claim.
Unfortunately, even after all these options have been considered, many businesses may still need to make redundancies. This could trigger individual and possibly collective consultation obligations. Please click here for detailed information on collective redundancies.
An employer can make employees redundant at any time if there is a reduced need for their work. However, with the CJRS scheme available, employees may well have a claim for unfair dismissal if there were no cashflow issues and the employee could have been furloughed at no extra cost.
If redundancies are made, employees are entitled to:
- Notice pay: All employees are entitled to paid notice. Their employment contract should state the length of the notice period but if not the statutory minimum notice will apply. This is one week’s notice for each complete year of service up to a maximum of 12 weeks.
- Statutory redundancy pay: An employee with two or more years’ service will be entitled to statutory redundancy pay. Click here for the Government’s calculator to work out what your employee is entitled to.
- Unfair dismissal: An employee with two or more years’ service could claim unfair dismissal if they feel the redundancy process and procedure was unfair. Compensation is capped at a maximum of one year’s pay or £88,519 (from 6 April 2020) if less, per person.
- Collective redundancy consultation: There is a requirement to consult where a business proposes to make redundant 20 or more employees at one place of work in a 90 day period. Please see our separate article for further details on collective redundancy.
When the furlough scheme comes to an end, normal trading conditions may take a while to return to normal and therefore continued review of the steps above may need to be considered for a business to survive the crisis.
We can help:
We are able to offer employers fixed fee HR support on a consultancy basis as and when you need it or for a fixed duration if required. This support can be tailored to the specific needs of your business.
- HR Audit: Recruitment, employment contracts, policies and procedures.
- Employment Advice Helpline: Direct access to our specialist employment law solicitor. If you need to double check something or are unsure how to go about an issue, contact Lisa Aitken on 07960 469988 or email LisaA@moore-tibbits.co.uk.
Offering holistic and effective solutions to HR and employment law matters, we can provide support and guidance on day to day staff issues to more complex disputes.