Redundancies: Time to act
According to this weekend’s Sunday Times, the government was persuaded to relax the lockdown earlier than it might otherwise have done by the warning from the Business Secretary that a failure to open up the hospitality sector in time for the summer could cost up to 3.5 million jobs.
Far be it from me to question the government’s thinking on this but I strongly suspect that a good proportion of those 3.5 million jobs Alok Sharma was talking about have already, in fact, gone and to paraphrase Mark Twain, reports of their continued existence have been greatly exaggerated.
In fact, I might go so far as to say that were it not for the introduction of the furlough concept and the staggering sums of money paid out via the Coronavirus Job Retention Scheme (CJRS), many of those jobs would be long gone and the incumbents would be signing on for Universal Credit and I think that is exactly what will happen post 31 July 2020.
Even where businesses can make themselves COVID-19 safe, the reality is that many of those business will look radically different from their pre-lockdown incarnation. Take, by way of example, Debenhams. Whilst Debenhams' administrators intend to reopen the stores, they won’t be reopening the cafes in the stores and so, as there is no prospect of the café staff returning to work, many of the café staff have been made redundant.
1 August 2020 is going to be a crunch date for employers because from that date, employers will have to start to contribute to the cost of keeping employees on furlough. Although it’s relatively small amounts to start with (employers NICs and pension contributions), that may be too much for some businesses.
"If you are an employer where furlough has just been a way of putting off the fateful day when you have to make redundancies, you need to be thinking about how you are going to implement those redundancy plans now."
Isn’t it just a question of ‘last in, first out’? Not if you want to avoid age discrimination claims it isn’t. If you’d asked me about the process of making redundancies prior to the lockdown, I would have probably told you that it didn’t really matter what process you used (not that I’d ever admit that!). Why didn’t it matter? It didn’t matter because in an economy with virtually full employment, the departing employee was likely to get another job very quickly, thus limiting his or her losses and making it not worth bringing an Employment Tribunal claim.
Now, the situation is VERY different. Many of those who will be made redundant will be out of work for a considerable period of time, many will have insurance cover for ET claims and we will also see the return of the ‘no win, no fee’ warriors.
So, it’s all the more important that when you have to make redundancies, you get it right and get it right from the off. That way when your ex-employee goes to his or her local ‘no win, no fee’ merchant or his insurer, they are looking at a redundancy process that looks pretty bullet proof which makes the prospects of a successful claim look very remote.
After all, you want to be re-building your business not fighting with former employees in the Tribunal.
Get in touch
For more information on this update, please contact Employment Principal, Jon Taylor.