Redundancy procedure for furloughed employees

25 June 2020

The UK government’s Job Retention Scheme provides businesses with a financial lifeline during the coronavirus pandemic.

However, even with this support it can still prove difficult for you to remain open. Even with staff away from work, a furlough redundancy may still be the only option available to you.

If that’s the case, where do you stand on an employment law front? Well, you can call us on 0800 028 2420 for immediate support on such an urgent matter.

But we also cover the essential points in this guide.

Your legal standing with redundancy during coronavirus

A question you may have is, “Can I start a redundancy procedure when employees are on furlough?” Yes, there’s no law against this in the Job Retention Scheme.

employee rights redundancy and furlough

However, your employee rights for redundancy and furlough are still the same as before. This means you must follow a fair redundancy process that considers alternative routes before you choose dismissal.

You also need a strong business case to move ahead, so you can justify your decisions.

Making staff redundant is a last resort. But, due to the nature of the coronavirus pandemic, in many instances it remains an unfortunate inevitability.

Redundancy procedure for furloughed employees

For employees on this scheme, you’ll need to decide whether the members of staff face dismissal. You can do this at any time.

Until then, they have the UK government’s financial support across a percentage of their wage.

However, if your business is struggling and you must terminate some employment contracts, you can make furloughed staff redundant.

The redundancy process while on furlough is the same as the normal dismissal procedure.

You must make sure you have a fair redundancy process for furloughed employees. And to do that, you should:

  • Have a strong business case to support your decision.
  • Consider alternative options before moving ahead, such as offering employees different roles in other departments.
  • Hold consultations with the employees facing dismissal.
  • Use a fair selection process for your employees, with impartial and thorough criteria.
  • Follow a fair and thorough procedure throughout to avoid against discriminating against any employees.

We have a redundancy process guide you can read for a detailed look into the step-by-step approach you should take.

But, ultimately, it’s essential you follow a fair and thorough approach that’s open with employees and documents all of your actions.

If you don’t, then it can result in a claim for unfair dismissal—or a grievance complaint during the procedure.

Although one of the biggest errors businesses often make is indirectly discriminating against an employee. Where you accidentally display prejudice, even though it wasn’t your intention to do so.

All of the above can lead to a costly employment tribunal. But, if you follow the right steps, you can lower the risks of this outcome.  

How to select employees for redundancy

One of the most difficult tasks for you is how to choose which members of staff to make redundant.

You must be careful with how you approach this, so your decisions don’t ever come across as due to discriminatory reasons (such as picking an employee who has a disability or is on maternity leave).

To avoid that, many businesses use a selection process such as a points system. Especially if there are many employees to consider.

The redundancy selections criteria for furloughed employees remains the same as with the standard procedure. Typically, a business will use a scoring system based off criteria such as:

  • Qualifications. 
  • Skillset.
  • Contribution to your business. 
  • Disciplinary record.
  • Standard of work. 
  • Aptitude. 

You must access each employee objectively. And then provide a score that genuinely reflects their contributions to your business. Otherwise you may discriminate against an employee.

You’ll need to consult with your affected staff at least twice (although this is only a legal requirement if over 19 staff face redundancy)—they may ask to see their scores and the selection criteria in use.

Otherwise, you can speak to staff and update them about proceedings.

It’s their right as an employee to see the process and the scores you gave them.

Ultimately, they can make a workplace grievance complaint during the procedure if they’re unhappy with your approach. Or even an appeal at a later date.

This is why it’s important to document all of your activities. As well as remaining fair throughout the process.

You may need to explain the reasons for your actions at an employment tribunal.

That’s even if you are diligent and thorough in your process and you do nothing wrong. So, it’s essential to maintain detailed records.

Providing redundancy notice to furloughed employees

You’ll provide a redundancy notice while staff are on furlough in the normal manner. You have consultation requirements you need to meet, so look to speak to staff.

A written notice is a legal requirement, but you can also discuss the matter with the individual over the phone—or via email.

You should check to ensure if the notice period for employees is contractual or statutory. As this’ll affect whether individuals receive their full salary during their notice period.

It’s highly advisable to base the pay they receive on their full salary. Not the furlough pay they’re receiving. And you must add into that any annual leave each employee didn’t take.

That should be the normal rate of pay with no discounts. For example, full pay for any given holiday day.

Need further assistance?

The coronavirus pandemic, and Job Retention Scheme, are changing rapidly. How does it affect your business? If you need expert support, call us now: 0800 028 2420

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