Collective redundancy and furlough leave: five points for HR to consider
The Coronavirus Job Retention Scheme (CJRS) may have been extended until the end of October but it is still only temporary, and employers should be planning their furlough exit strategies now.
For some businesses, it may not be possible to continue to employ individuals whose jobs do not exist without the help of a government grant, and redundancies will be inevitable.
For employers who are anticipating any type of workforce restructuring (including potential redundancies) in the coming weeks and months, it is vital to understand these obligations to avoid unnecessary delays, costs and legal risk.
This article sets out five key points for HR professionals to consider in relation to collective redundancy.
1. Trigger: Collective consultation is required where an employer proposes to dismiss 20 or more employees at one establishment in a 90-day period.
The meaning of proposal is not clear cut; case law suggests that a proposal is more than mere contemplation of the possibility of redundancies but less than an actual decision to make redundancies.
It is important that employers enter consultation with an open mind, and that proposals are still at a formative stage.
2. Consultation period: The employer must begin consultation with elected representatives in good time and at least 30 days (or 45 days if 100 or more redundancies are proposed) before any notice of redundancy takes effect.
Where this is not reasonably practicable and “special circumstances” exist, employers might be absolved from full compliance with their consultation obligations.
While the global pandemic is unprecedented and unique, its effect on businesses is unlikely to amount to “special circumstances” and it is advisable for employers to comply to the fullest extent possible to avoid potential sanctions for non-compliance.
3. Elected representatives: The employer’s duty is to consult with representatives of the affected employees, and conduct separate individual consultation with those who are at risk of redundancy.
Unless there is an existing elected employee body, or a trade union recognised by the employer, employers must arrange the fair election of appropriate representatives – which means facilitating a secret ballot, ensuring that all those eligible to vote can do so, and fair counting of votes.
Where the affected employees are all working from home there are some obvious additional practical issues -– for example, how to conduct a fair and secret ballot online and how to conduct consultation meetings remotely while government guidance relating to social distancing remains in place.
4. Notification: Employers are obliged to notify the Secretary of State (for Business, Energy and Industrial Strategy) on a ‘Form HR1’ at least 30 days before the first dismissal takes effect where proposing to dismiss 20 to 99 employees. This moves to 45 days prior to then where proposing to dismiss 100 or more employees (in each case at one establishment within a 90-day period).
5. Sanctions - Failure to comply with the consultation obligations entitles all employees who are made redundant (regardless of length of service) to claim compensation of up to 90 days’ pay per person in a tribunal. This is known as a protective award.
It is also a criminal offence not to comply with notification requirements, attracting a potentially unlimited fine and, where the failure is found to have been committed with the consent or connivance of, or is attributable to the neglect of, any director, manager, secretary of similar officer of a company, that individual may also be criminally liable.
Merrill April is a partner and Harriet Riddick is an associate at CM Murray. Both specialise in partnership and employment law issues.