Over recent weeks there has been a huge amount of emphasis on dealing with the lockdown.
Businesses and business owners have worked tirelessly to get their heads around the terms of furlough under the Coronavirus Job Retention Scheme, ensuring staff who need to work can do so remotely, and that the office, factory or other workspace remains safe for those who do need to physically attend the workplace.
As time marches on however, focus has started to shift towards the future as the social distancing restrictions start to ease and businesses look to see how they can get people back to work safely.
With such topics now starting to take centre stage, our Director and Head of Employment Law, Katie Ash, discusses what businesses need to keep front of mind when making key decisions about the future.
Business owners and decision makers have had a huge job over recent weeks to try to secure the future of their business in very, very difficult circumstances. However, the reality is that while the government may well announce a slight relaxation in the rules in the coming weeks, the ‘revenue tap’ is unlikely to be turned back on with immediate effect.
Essentially, many organisations will have seen work dry up, or projects put on hold, because of Covid-19, and that work is only likely to pick up gradually once the lockdown is lifted. It could be another six to 12 months before things return to normal, whatever the new normal may be, meaning that existing overheads are unsustainable.
Thankfully since drafting this, the furlough scheme has been extended to October which will assist businesses in those sectors that are likely to have a slower recovery. Once furlough ends, the cost of those furloughed staff will fall back on the business at a time when work and income may still be depleted, and therefore major operational changes may become necessary. Many businesses will be considering branch closures, redundancies, and maybe even companywide salary reductions or short time working. We may even see a surge in mergers, acquisitions, and business consolidations as businesses look to combine resources.
This may all seem rather overwhelming, but it does not mean that the process needs to be cumbersome or costly if employers and employees work together in the best interests of the business. After all, one of the slogans most associated with the pandemic is ‘In It Together’.
First things first: it is worth carrying out a comprehensive review of all employment contracts. They may already contain clauses that staff have agreed to that will help ease the pressure of reopening such as temporarily reducing hours or asking colleagues to work in a different (less costly) location. Some will ask staff to remain working from home for example as a way to reduce costs.
Other potential savings could include reducing or dispensing with overtime; dispensing with discretionary benefits; moving employees to other roles within the business (subject to their agreement); offering early retirement; and putting a freeze on recruitment.
While much of this will be less than ideal – both from your, and your employees’ perspective – it could help to steady the ship, and allow you to making savings that will help the business return to a sustainable position for the longer term.
If however, redundancies do become necessary, it is important to remember that the usual employment law rules do apply despite the rather unprecedented set of circumstances we find ourselves in. Staff are protected from unfair or unjust dismissals by law, and employers who don’t carry out proper and full consultations could land themselves in hot water.
If you are considering redundancies, at the outset, ensure you have a justifiable reason for making a role redundant. Examples may include closing down a department, making cost savings by reducing staff numbers, the closure of the business, or the introduction of new technology that has made the role unnecessary.
You must make sure that you do not discriminate when choosing employees for redundancy. Fair reasons may include performance or an employee’s disciplinary record. It would be prudent to score employees based on a range of criteria and do note that some reasons are automatically unfair and should not be used.
Once you have identified those at risk, you will also want to ensure that you calculate the cost of the redundancies to the business. Remember, that whilst you will ultimately save on salaries, if an employee has been with you for two years or more, they will be entitled to a statutory redundancy payment in addition to their contractual or statutory notice.
At this stage, you must ‘meet’ with employees if they are at risk of redundancy or have been selected for redundancy. If that individual is shielding and not able to meet in person it does not stop them from taking part in this step of the process, and you must ensure that you look at alternative methods to hold the consultation, including using video call technology or even good old fashioned pen and paper. During the consultation process, you may consider other alternatives with employees, such as offering a position in a different department (if possible) or reducing hours of work.
If you are making 20 or more redundancies within a 90 day period, then you will also have to carry out what is known as collective consultation. This places more legal obligations on an employer to carry out certain steps during the redundancy process and it would be prudent to take advice to make sure you get it right as the penalty for getting it wrong could be up to 13 weeks’ actual pay per employee and a criminal conviction.
The next step is agreeing a leaving date, and to confirm this to your staff in writing, giving the correct notice period under contract or statute, with statutory notice being given as a minimum (this depends on each employee’s length of service).
If an employee appeals, you should invite them to attend a further meeting to hear the appeal, and follow it up with a letter to confirm the outcome.
Whatever your process looks like, it is absolutely vital that you document every stage of the process.
Fundamentally, redundancies are always linked to cost savings, but for many businesses this has never been such an important issue, or affected so many individuals. Getting the process right is therefore key to ensuring that you don’t fall foul of employment law and potentially cost yourself and your business more as a result.
If your business needs advice on any of the areas covered in the article please call us today and we would be happy to help.