As the Coronavirus Job Retention Scheme, otherwise known as furlough, begins to wind down I have received a number of requests from employers for help in complying with the statutory processes required to make staff redundant.  And in equal measure I have represented a number of employees who have been made redundant and whose employers have totally disregarded their statutory obligations – to their cost!

This is what you must do if you are making fewer than 20 employees redundant.  If you are planning to make 20 or more employees redundant please take legal advice.

Yes, you can make an employee redundant if they are furloughed but their notice pay should be 100% of salary.

  1. As soon as you consider you may have to make staff redundant you should tell them that they are ‘at risk of redundancy’.  Better to issue an ‘at risk’ letter and then retain the employee than dismiss by reason of redundancy without telling the employee they are ‘at risk’.
  2. You are statutorily obliged to undertake a consultation meeting with each employee you are considering for redundancy.  You must explore ways and means of retaining that member of staff.  Sometimes an employee will offer to reduce their hours for example, or even take a sabbatical whilst your business gets back on its feet.
  3. You must have a set of criteria against which to make your decision as to who you are going to make redundant and who you will retain.   Please make sure your selection criteria are non-discriminatory.  In particular take care not to discriminate on the grounds of age.  For example ‘last in first out’ will often discriminate on the grounds of age as your newer employees are more likely to be young.  If you decide to use attendance as a selection criteria, make sure that any poor attendance is not related to a disability.
  4. At that consultation meeting the employee may ask you what criteria you are using for selection.  Show them your selection criteria and how they personally scored against it – do not show them the score you have allocated to other employees as that would be a breach of data protection legislation.
  5. Dismissed employees are entitled to notice pay.  The law requires that you give one weeks’ notice for each completed year of service – unless their Statement of Terms & Conditions gives a greater notice period.  So, six years service, six weeks notice period.   Notice pay is subject to tax and national insurance.
  6. You can only rely on pay in lieu of notice (PILON) if you are contractually entitled to do so.  Check your Statements of Terms & Conditions before being tempted to use PILON.
  7. Employees are entitled to receive pay for any annual leave accrued but untaken as at their last day of service with your organisation.   If the employee has been furloughed then you must repay bank holidays as they were not a holiday if the employee was furloughed.  Annual leave must be repayed at 100% of salary.
  8. Redundancy pay is free of tax and national insurance if it is less than £30,000.
  9. Redundancy pay is calculated on the basis of a statutory weeks’ pay which is currently £538 per week, unless their pay is less in which case you use the lower of the two sums.
  10. Redundancy pay is also calculated on the basis of length of service and age.  You can find a calculator for redundancy pay here.
  11. During their notice period, employees who have been made redundant are entitled to ‘reasonable’ time off to attend interviews etc.
  12. Be aware of ‘survivor syndrome’ – that is the guilt felt by employees when they are safe but their colleagues have lost their jobs through no fault of their own.  And be gentle, redundancies may be a business necessity but remember that you are depriving an employee of the means to pay their rent/mortgage and to put food on their table so they do at least deserve your sympathy.

Please phone me if you have any queries or need help, 07766 167160.  I am currently providing Covid 19 advice free of charge to Chamber members.

 

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