An employment lawyer explains how to prepare for making people redundant

Following the announcement that employers will be expected to contribute to the furlough scheme from the end of July and with the scheme to end permanently at the end of October, travel businesses are now taking stock of whether staff can be retained, or whether they will need to be let go.

If they do, what should employers prepare for? Here are my key considerations for employers.

Step 1: Is there a redundancy situation?

A redundancy situation occurs in the circumstances of business closure, workplace closure or when there are diminished requirements for employees to do work of a particular kind.

Any of these might arise in the current climate. Carefully document the business reasons for redundancies in case you need to evidence it if a dismissal is disputed.

Other overarching considerations to take into account are as follows:

• If you have a contractual redundancy policy, follow this.
• Beware of the special rules which apply to some groups, such as employees on maternity leave.

If your process or selection criteria puts employees with certain protected characteristics at a disadvantage e.g. their sex, race or nationality, age or a disability, you may face costly discrimination claims.

Step 2: Do you need to consult collectively?

This depends on how many redundancies, timing and location:

• When there are 20-99 redundancies at an establishment within a 90-day period, collective consultation must begin at least 30 days before the first redundancy takes effect.
• For more than 100 redundancies in a 90-day period, consultation must begin 45 days before the first redundancy.
• Fewer than 20 people: collective consultation does not apply and you can skip to step 5.

Not following the required collective process will entitle affected employees to a protective award of up to 90 days’ pay.

If employees are on the Coronavirus Job Retention Scheme and you are thinking about making them redundant, consider the following:

• If you want employees exited on the first tapering-off point, i.e. 31 July 2020, you must start collective consultation on 16 June and 1 July 2020 respectively.
• If on the end of the CJRS, you must start collective consultation on 16 September and 1 October 2020 respectively.

Step 3: Notify the government

It is a criminal offence not to notify the department for Business, Energy & Industrial Strategy no later than the first day of any collective consultation process on the prescribed form.

Step 4: Start collective consultation

• appoint elected representatives for affected employees
• provide representatives with information prescribed by the legislation
• consult with the representatives about avoiding or reducing the number of redundancies, and limiting the effects of redundancies

Step 5: Individual consultations

In addition to collective consultation, or if making fewer than 20 redundancies, an individual consultation process should be followed, as follows:

• Identify who is affected
• If you need to select from a group establish and score against objective selection criteria
• Notify employees they are “at risk” of redundancy
• Consult with at risk employees to explore whether alternatives to redundancy are possible, e.g. redeployment
• Confirm the outcome: retention or termination of employment and what their entitlements are, e.g. notice and redundancy pay
• Possibly, give the employee the opportunity to appeal

The process will vary depending on the circumstances, your resources and time-constraints. You will need to ensure decisions are recorded in writing. A failure to follow a fair process could give rise to unfair dismissal claims.

What you owe to employees

• Notice: either statutory or contractual, and either worked out or paid in lieu (if there is a contract clause which allows for this).
• Contractual entitlements, e.g. bonus or any contractual enhanced redundancy payment, accrued holiday
• Statutory redundancy payment: if there is no contractual redundancy pay, and the individual has worked for you for more than 2 years. This is calculated based on the individual’s age, length of service and a weekly pay cap which changes each April. A link to the government’s calculator is here.