The Transition from Furlough to Redundancy
With 70% of staff being furloughed last April, the world is experiencing uncertainty with the future and this has not passed companies by. Many do not know if they will still be around a year or two from now and are bound to take action. As a result, companies must pick between three primary options:
- Extending an employee’s furlough leave
- Requiring them to return to work full time or part time
- Leaving them redundant
Unfortunately, the last option has been highly common during this global pandemic. While this is a stressful time for anyone going through it, we’re here to make sure you know if your old job is following the government rules and regulations on redundancy or if you are an employer how to get the process right.
How does furlough leave become redundancy?
The correct redundancy procedure:
- Before contacting the affected employee(s), employers must first notify the Redundancy Payment Service (RPS); this must be done before the consultation starts.
- Employers must then contact the affected employee(s). For large-scale redundancies, trade union representatives or elected employee representatives can be contacted instead. Thorough and concise information will need to be provided to the affected employee(s) about the planned redundancy.
- If the affected employee(s) has any requests, the employer should respond to them as quickly as possible.
- The employer must provide clear guidance relating to the termination notice(s). The notice must display the leaving date that has been agreed upon by all parties.
- The final stage in the process is to issue the redundancy notice(s). This should only be done once all of the above steps have been completed.
*The redundancy notice period can begin while an employee is on furlough; however, the employee will need to receive their pre-furlough salary for this period if they have statutory minimum notice rights. Up to 80% of this can be reclaimed from HMRC, but the remaining 20% will have to be covered by the employer. Employers are also NOT allowed to use furlough payments to cover redundancy payments.
Compulsory vs Voluntary Redundancy
When deciding to make an employee redundant, an employer must choose between offering voluntary or compulsory redundancies.
- What is compulsory redundancy?
When an employer makes an employee or employees redundant.
- What is voluntary redundancy?
When an employer asks employees if they wish to be made redundant.
Regardless of redundancy type, an employer is required to make the process fair and free of any potential bias. They must ensure they cannot be criticised for the way they go about employee redundancies by factoring in quality of work, attendance, disciplinary records and the skill of the worker.
What is a collective redundancy?
In response to the devastating impact of coronavirus, collective redundancy has risen substantially. This is a redundancy where an employer makes 20 or more employees redundant within a 90-day period.
During this, they must follow collective consultation rules which vary depending on the mass of workers being made redundant. For example:
- If 19 or fewer redundancies are being made, there is no minimum consultation period but employers must still contact the RPS before the first redundancy takes place
- If 20-99 employees are experiencing redundancies, employers must contact the RPS 30 days prior to the first redundancy taking effect.
- If 100 or more employees are being made redundant, then the employer must contact the RPS 45 days before the first redundancy.
If you would like legal advice regarding the topic of redundancy, please complete the enquiry form or call us on 0161 249 5087 so we can help you to determine if you have a case and discuss your options.