Making changes to your employment
structure during furlough

Employment Law Solicitors in Salisbury & Chippenham

The Coronavirus Job Retention Scheme may have been extended to 31 October 2020, but employers are now thinking about making changes to their employment structures now so that their businesses are in the best position for the future.

We set out below our answers to key questions about options for restructuring the workforce. These cover options for extending furlough, notice and redundancy payment rights during furlough, changing terms and conditions, and dealing with redundancies.

AVOIDING REDUNDANCIES ALTOGETHER.

Can we reduce costs by reducing the pay or hours of employees until demand picks up? The starting point is to look at your contracts of employment and any custom and practices that have existed. Given the unique nature of the situation caused by the pandemic, employees may be more open to exploring different options on either a temporary or permanent basis. Options may include:-

  • 1. Layoff. Contracts of employment may contain a layoff clause which entitles you to reduce employee hours and pay. However, if there is no layoff clause, the Coronavirus Job Retention Scheme has created a form of agreed lay off if your employees agree but you will no longer be able to reclaim salary or other wage costs from the furlough scheme after it has ended. There are specific statutory provisions for laid off employees which provide a right for employees who have been laid off for four or more consecutive weeks, or six weeks in any 13-week period, to claim a statutory redundancy payment in certain circumstances. However, the scheme does require employees to resign in order to receive their redundancy payment.
  • 2. Reduced pay or hours can be negotiated with employees either through permanent or temporary changes to their contracts of employment or changes to their layoff or flexible work requests. The government extended the job retention scheme in its current form until 31 July 2020. From 1 July, flexible furloughing is allowed so employers will be able to bring employees who have been on furlough back on a part-time basis.

Redundancies

If there is reduced demand for employees or a reduced demand for work that your employees do, you may want to consider a redundancy procedure.

Key to a fair redundancy procedure is consulting with employees about how to potentially avoid redundancies, for example taking the steps outlined above. If this is not possible redundancies may be inevitable and employees will be entitled to a statutory redundancy payment if they have been employed for at least 2 years, notice pay and any accrued holiday.  The current Job Retention Scheme potentially allows employers to furlough employees during their notice period thereby subsidising redundancy costs. Given that Governmentsubsidised-redundancies is clearly contrary to intentions of the Job Retention Scheme we suspect that this may come under review in the coming weeks.

Questions and Answers

At the moment yes, but there has been a lot of debate on this issue following the latest amendments to the Treasury Direction  which was amended on 25 June to say that “integral to the purpose” of the scheme is that the grant is used by the employer “to continue the employment of employees… whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission” (bold added). 

Yes, if an employer decides that the need for employees or the need to work the hours they are employed for has fallen, an employer  is entitled to make redundancies. Redundancy is a potentially fair reason for dismissal and nothing in the Job Retention Scheme changes this.

Employees are entitled to one week’s notice for each year worked or the notice period as set out in their contract of employment, whichever is the greater. Their contractual entitlement is to full pay during their notice period so furloughing an employee does not reduce their contractual notice pay to full pay.

What you cannot do is terminate the employment of an employee and use furlough to pay them in lieu of their notice.

Yes, The requirement is to consult employees and we see no reason why this cannot be done over the phone. The requirement is to follow the consultation process and for redundancies of more than 20 people, this includes consideration of engaging employee representatives.

What you cannot do is terminate the employment of an employee and use furlough to pay them in lieu of their notice.

For more information about redundancy procedures and making changes to your employment arrangements , please contact Ian Steel on ian.steel@battbroadbent.co.uk

We can hold the initial meeting either my telephone or by video call if you would like.

Batt Broadbent Employment Law Solicitor Ian Steel

Ian Steel

Solicitor

You can leave us a message so we can contact you:

Salisbury Office:

01722 411 141

Chippenham Office:

01249 472 444