Here are answers to 10 frequently asked questions on redundancy.
Can we make furloughed employees redundant?
Yes, although the Job Retention Scheme is intended to keep people in employment, employees can be made redundant whilst on furlough. However, if proposing to make redundancies before the Scheme comes to an end on 31 October, think about whether it would be reasonable to maintain employees on furlough as an alternative to dismissal. If it's not, document the business case for making redundancies now.
What does a fair selection process look like?
Consider which employees do the work that is disappearing and identify the group of employees from which those who are to be made redundant will be selected. The pool for selection is usually made up of employees doing the same or similar work, but there are no fixed rules on how to choose the appropriate pool.
Where only part of the workforce has been furloughed, it is likely to be unfair to only select employees for redundancy from the group which have been furloughed. Selection for furlough may not have been sufficiently robust. Also, if employees volunteered for furlough, it may not have been made clear at the time that volunteering had implications for future redundancies.
When selecting from a pool, apply objective selection criteria such as individual skills or performance, relevant experience, qualifications/training, disciplinary or attendance records. The scoring process should be as objective as possible and checked against personnel records and appraisals where possible. Think about whether it might be a reasonable adjustment to adjust the process for a disabled employee e.g. by discounting disability-related absences where attendance is part of a redundancy selection process.
Do employees have a right to see their selection scores?
A fair redundancy selection process requires that employees have the opportunity to contest their selection. Therefore, enclose details of the employee’s score with the letter informing them that they are at risk. Explain how the score was calculated and give them a chance to challenge the scoring as part of the individual consultation process.
There is no need to disclose the marks or assessments of the other employees at risk of redundancy. However, it can be helpful to notify employees of the ‘break point’ (the mark they would have had to have got to avoid selection) - particularly if they ask for it.
Do we need to ask for volunteers?
No, there is no obligation to do so.
If asking for volunteers, reserve the right to refuse applications – so that it is possible to reject applications from employees in certain key roles to retain a balanced, skilled workforce, or in the event that more applications than needed are received.
When are the collective consultation obligations triggered?
If there is a proposal to dismiss as redundant 20 or more employees at one establishment within 90 days, consultation must take place with appropriate representatives of affected employees (in addition to individual consultation):
- In relation to proposals to dismiss as redundant 100 or more employees within 90 days, collective consultation must begin at least 45 days before the first dismissal takes effect.
- In relation to proposals to dismiss as redundant between 20 and 99 employees within 90 days, consultation must begin at least 30 days before the first dismissal takes effect.
If there are no trade union representatives, and no representatives already elected for the purposes of redundancy consultation, an election process will be required. This would need to be factored into the timing of the information and consultation process. Both individual and collective consultation can be carried out with employees on furlough.
When does the 'special circumstances' exemption apply?
There is a limited exception to the obligation to collectively consult where there are 'special circumstances' which render it not reasonably practicable to comply. Insolvency is not in itself always a special circumstance, however, a 'sudden disaster' (physical or financial) can be. The impact of coronavirus will not necessarily fall into this category, given that government support is available to businesses. Whether it does will depend on the particular facts and circumstances: take advice.
Even if the exception applies, steps should be taken to comply with the collective consultation obligations as far as possible i.e. by consulting for a shorter period.
Can we consult with employees remotely?
Yes, where possible set up video calls to facilitate discussions. Think about issuing guidance on ensuring that meetings are confidential; and encrypting information being sent to personal email addresses. Explain that a notetaker will be present and that the call should not be recorded (read our blog on recording employee meetings).
Are employees entitled to be accompanied at consultation meetings?
The statutory right to be accompanied does not apply to redundancy consultation meetings but is often offered in the interests of fairness (and should be offered at the final dismissal meeting). This should still be possible where consultation is being carried out remotely by allowing companions to join the call and, for example, allowing virtual break out rooms.
What are employees entitled to if they are made redundant?
Redundant employees with at least two years' service are entitled to a statutory redundancy payment. The amount of statutory redundancy pay due depends on age, length of service and salary (based on the employee's weekly pay as at the calculation date, capped at the statutory maximum rate - currently £538 per week). How to calculate a week's pay depends on whether or not the employee has normal working hours. The government's redundancy pay calculator is here.
The extent to which furlough pay will be taken into account when calculating redundancy pay will depend on the calculation date and whether the employee has normal working hours or not. Payments in lieu of notice and redundancy payments cannot be claimed under the Job Retention Scheme.
What are the risks if we get it wrong?
A failure to collectively consult can lead to a protective award of up to 90 days' gross pay per affected employee.
Employees with two years’ service can bring unfair dismissal claims. Even if there is a genuine redundancy situation, a dismissal may still be unfair if the correct procedure has not been followed (including fair selection, meaningful individual consultation and consideration of alternatives to redundancy). There is no minimum service requirement if an employee alleges that their dismissal was discriminatory, or automatically unfair (e.g. on the basis that their selection was because they had made a protected disclosure).
Workbox by Brodies
More information is available on the Redundancy pages on Workbox, our award-winning online HR and employment law site. There are more FAQs and guidance plus a suite of templates including letters, ballot papers, a consultation schedule and a selection matrix. If you are not already a Workbox user, please get in touch to request a free trial.
Our Workbox Coronavirus pages are free to view to everyone and can be accessed here.
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Practice Development Lawyer
