The clock is ticking on mass redundancies
The clock is ticking on mass redundancies in the UK as businesses are forced to prepare for the end of the Government’s furlough scheme on June 30.
Although there are nearly two months remaining until the furlough scheme ends, businesses that make more than 100 people redundant must undertake a minimum 45-day consultation process before laying off staff. That means decisions on starting the consultation process must be made in the next two weeks.
If the company’s workers are not represented by a trade union and the employer needs to arrange for the election of employee representatives, the time needed to complete the consultation process practically can be up to 60 days (or possibly more), giving the biggest businesses just a week to make a decision.
The Government need to make clear within a week whether the furlough scheme will continue beyond June 30, giving businesses the certainty they need to keep staff on the payroll and avoid redundancies.
Chancellor Rishi Sunak previously announced a one-month extension to the scheme on April 17.
"Businesses don’t want to make any of their staff redundant, which is why the furlough scheme has had such huge take-up. But soon they will have no choice unless the Government gives them more certainty fast."
Lots of businesses have survived near zero income levels in recent weeks by reducing costs to near zero through furloughs. If all those staff costs come back on July 1, some risk insolvency. That will unfortunately make redundancies inevitable, especially in sectors like retail and leisure.
The lack of clarity around how and when the lockdown will be lifted also means that businesses are unable to make any concrete plans as to when and how they can re-open.
If the Government does not give businesses certainty past June 30, businesses will have to start redundancy consultations with their staff in a matter of days. That certainty needs to come as soon as possible, or many will be forced into redundancies by default.
I don’t think anyone now believes that our economy will be completely back to normal in two months’ time. That must weigh very heavily when the Government decides whether to extend the furlough scheme.
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All information in this document is accurate at the time of writing. It is meant for general information only and is not legal advice.