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The impact of coronavirus continues to be substantial, with many businesses across the UK facing significant business worries and little certainty on the edge of the horizon. In such a situation, employers therefore need to consider all eventualities, including potentially making people redundant, it is the only responsible thing to do.
However, the problem with redundancy is that it is final and potentially deprives the employer of much-needed skills and talent that may be needed once the pandemic is over. It can also impact if and when you can recruit.
Below we consider some of the other options available to employers, although it is not intended to be exhaustive.
1. The Government’s Job Retention (“Furlough”) Scheme
One of the key policies that the government announced back in March 2020 to support businesses and individuals against COVID-19 was the Coronavirus Job Retention Scheme (‘CJRS’ or ‘furlough’ Scheme) to discourage employers making employees redundant. Here employees could access financial support to continue paying part of the salary of those employees who would otherwise have been laid off during the Covid-19 crisis. This works by placing staff on “furlough”, during which time that member of staff conducts no work for their employer, but still has a percentage of their pay on which to live. The Scheme has been used significantly since its inception and has recently been extended to run until September 2021 (originally October 2020).
Rather than losing talent in your workforce, you can be given the breathing space with the government contributing to their costs, but you can still have them back at work when you come out of the current crisis
2. Lay-offs and short-time working
Where an employer cannot provide work to an employee, they may, as a temporary measure (where permitted by the contract of employment) lay off the employee or put them on a short-time working arrangement:
- Lay-off – where an employer no longer requires an employee to attend work for a temporary period. The employee will not be paid but may be entitled to a statutory Guarantee Payment — presently the maximum is £30 a day for five days in any three-month period (maximum of £145 with part-time entitlement being pro-rata). The major problem with laying off staff is that the employer must have a contractual right to do it or they could face claims of constructive unfair dismissal and unauthorised deduction of wages at the employment tribunal. A further problem is that employees who are laid off will have a right to treat themselves as dismissed by reason of redundancy (and are entitled to the associated redundancy package) if a contractual lay-off extends beyond four consecutive weeks, or beyond six weeks in any 12-week period.
- Short-time working – similar to laying-off. The employer unilaterally reduces an employee’s hours and pay on a temporary basis. As with lay-offs, there must be a contractual right for the employer to make the change, and, again, the employee retains the right to claim a redundancy payment once certain timescales have been reached. The employee on short-time working may also be entitled to a statutory Guarantee Payment — mentioned above.
If you are considering either of these options, you should first check whether you as an employer have the contractual right to do so, and none of the other options mentioned here (including Furlough) would be better for all concerned.
3. Reduction of hours and pay by agreement
You could introduce a shorter working week (and, therefore, a reduction in pay) as a temporary measure. This will require consultation with the workforce and their written consent to the temporary changes. You should make it clear during the consultation that the alternative will be redundancy. A temporary reduction in hours and pay is more likely to be accepted by your employees as an alternative to the finality of redundancy. You are likely to face claims at the employment tribunal if you introduce such a measure unilaterally. Reductions or stopping overtime can also work similarly here.
4. Change to recruitment policy
There are several actions that you could take, including:
- withdraw job offers and/or deferring new starters — but remember unilaterally withdrawing a job offer that has been accepted will be a breach of contract and that deferring a new recruit’s start date will require their consent if the offer has already been accepted; however, the sums involved in payment for breach are not likely to be substantial especially if you compare this to the redundancy of long serving members of staff;
- changing how you recruit, for example going direct rather than using recruiters;
- a recruitment freeze; and/or
- reduce or stop the use of temporary staff.
Recruiting right now, just might not be right for those concerned. You can also reduce your wage costs by simply not recruiting when people leave the business, through natural attrition.
5. Redeployment
You could consider redeploying those employees who have seen a recent downturn of their work. They could be redeployed to areas of the business where there is a maintained or increased workload. However, remember, they may need a short period of retraining to support the redeployment. There could also be a possibility of staff being moved to another employer on a temporary basis. The new employer would meet the salary costs.
6. Sabbaticals and unpaid leave
Some employees may welcome the opportunity for unpaid time off. You could even pay a “sweetener” to encourage this option, if Furlough isn’t the answer for them.
Black and White Accounting
Whilst redundancy is an option a responsible employer cannot ignore in a tough climate, there are also other options available, including furlough, lay-offs, short-time working arrangements, reductions in hours or pay, changing your recruitment strategy, redeployment, sabbaticals or other unpaid leave. We are not HR professionals, but we have some great consultants and solicitors waiting in the wings, ready to support you here. We have a team of Strategic Advisors, who are waiting in the wings, ready to help you if you need it.
Please get in touch with us today by contacting Black and White Chartered Certified Accountants, populate the “Got a Question” form on the right, or call us on 0800 140 4644 if there is anything we can do to help you.
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