Redundancies during furlough and the CJRS

Posted On: 11th May 2020

We wanted to take the opportunity to share our thoughts on redundancies during furlough and the CJRS.

First of all, it is important to consider the ethos of the scheme which is to save the jobs of those that would have otherwise been made redundant. So, if you have agreed furlough with your employee (have you got the correct Furlough Agreement in place?) and you are receiving the furlough grant, is making redundancies within the spirit of the scheme?

There may well be circumstances in which any reasonable employer would conclude that the CJRS means that there is no need to make employees redundant. The CJRS job does not however in itself protect employees against redundancy. Nor does it cover all of the costs associated with employing somebody.

If you are considering making redundancies and you have not already done so, you should consider whether there are alternatives to redundancy, will employees agree a pay decrease temporarily or long term? Most relevant for those that earn over the £2500 cap. Will employees agree to forego some commissions/ bonuses in an attempt to avoid a redundancy situation? Make sure that you consult properly regarding any proposed changes.

We would also recommend that you keep documentation that demonstrates those considerations have supported your decision and why there may not be another option to redundancy.

There is no doubt that you may be thinking now about when restrictions are lifted and whether your workforce headcount it too high? You may also want to start consulting asap in an attempt to use the CJRS (currently in place until the end of June) to pay any notice due.

Given the ethos of the scheme, it is questionable as to whether these consultations may be considered to be premature and if the Employment Tribunals will determine whether they are or are not premature. If you decide you want to proceed and reduce your headcount and are prepared to make the decision and take the commercial risk, please be aware that a fair process must be followed. Our team of experts at Absolute Works can support you through the whole process. We can also support with agreeing contract changes and consultations.

It is the general consensus that any announcements/ consultations that are required as part of the redundancy process can be carried out via video conferencing or telephone call and that such attendance would not be deemed to be ‘work’ and thus the furlough period would not be broken.

If you do reach the stage where you need to make roles redundant, you will have to pay either contractual or statutory notice pay. Notice pay is a grey area with no official government guidance being published on the interaction of notice pay and the CJRS. We would recommend that you seek expert guidance in relation to notice payments.

You should be aware that any redundancy entitlement cannot be claimed through the furlough scheme neither can a payment in lieu of notice.

Due to the unprecedented situation we consider it is important to highlight these potential risks.

Absolute Works will be happy to support you so please do get in touch by replying to this email or calling 01926 355560.

As with all directions and guidance during the Covid19 it is possible or likely we will receive further updates on redundancy and notice period which may or may not change our guidance above. 4th May 2020