With the furlough scheme end date drawing near, many businesses are facing the difficult decision of whether to make some of their workforce redundant. In fact, 695,000 people have dropped from company payrolls since the early stages of the pandemic in March according to the Official National Statistics (ONS).
This figure is likely to increase after the 31 October when the furlough scheme ends, so it’s important you’re prepared to make redundancies if you feel it’s the right choice. However, you might want to explore the alternative options available to you before you start down the road of redundancy. We’ve outlined below the alternative options you can consider before making any decisions followed by some key points about how to carry out the redundancy process fairly and compliantly.
If you can’t afford to have your workforce back on their normal hours at present, you could instead consider short-time working as a temporary measure rather than making redundancies across your workforce now. This method allows you to maintain employment but on a reduced hour basis. It is intended as a short term measure and must have already been agreed as an option with your employee in either:
Another temporary measure to consider is laying employees off. This is not the same as redundancy, but rather is a temporary period where the employee is not provided with any work but remains your employee. Employees on lay-off qualify for Statutory Guarantee Pay for the first week (currently a maximum of £30 a day) but it is then unpaid for the remainder of the next three months. The above considerations apply to lay off as they do to short-time working namely:
Other options to consider before making any redundancies are proposing to make more permanent changes to employees’ terms, for example:
A simple suggestion like this can go a long way. When sitting down and looking at every aspect of where you’re spending your money, you could potentially reduce resources and services. You should start by looking at freezing your recruitment activity (if applicable) for the time being and focus on your core employees. Are there any overheads you can reduce, even on a temporary basis? Would switching any suppliers save money? If you offer your people bonuses or overtime, can you put these on hold? Can you reduce your pension contributions until you can comfortably partake again? It’s a legal requirement to contribute the minimum amount of your employee’s pension. Again, if such suggestions would vary employees’ contracts, you should go through a proper consultation process as outlined above, including explaining the reasoning behind the proposals.
One of the key elements of a fair redundancy process is meaningful consultation. This vital step helps the employee(s) understand what has led to the redundancy proposals and allows them to engage in the process. When considering who to make redundant within your team, you need to consult on fair criteria that will benefit your business long-term, but also so your people will understand. There is less demand for some roles during current times so looking at these roles may be a starting point for redundancies. This could apply to new departments who were at the early stages before the pandemic, as they may be premature to operating at full capacity. While redundancy is never a pleasant topic, it’s certainly one that requires careful consideration and expert guidance. Our HR and Employment Law experts have put together a checklist of five of the key things you’ll need to think about before embarking upon a redundancy process.
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