After several weeks of lockdown, the stark reality for some HR managers is that redundancies are now unavoidable. Managing a redundancy procedure can be challenging in normal circumstances but Covid-19 has added some new layers of complexity.
Here are the top 5 pitfalls that HR must take care to avoid when faced with managing a redundancy process against the backdrop of the Covid-19 pandemic.
Pitfall #1. Tripping up on the timetable….
Many CEOs and managers are regularly posting and publishing employee updates regarding the state of the business and its economic forecast. HR must be kept in the loop and run a cautious eye over these communications to avoid any unintentional triggering of a collective redundancy timetable.
Collective redundancy consultation with appropriate representatives of affected employees will be required where at least 20 redundancies are being ‘proposed’ at the same establishment within a 90-day period. It can sometimes be difficult to pinpoint when redundancies are ‘proposed’ but once you have moved past the point of redundancies being a ‘possibility’ it’s likely you will need to consult. Consultation must begin in good time and must last for at least 30 days before the first dismissals (or 45 days if 100 or more redundancies are proposed).
Announcing that redundancies are ‘highly likely‘ or ‘unavoidable’ may feel honest and transparent to business leaders when the outlook is bleak. However, this type of language may unintentionally trigger statutory collective consultation requirements (or worse, expose employers to unfair dismissal claims and protective awards of up to 90 days’ pay per affected employee). If, in fact, plans are not yet solid enough to count as ‘proposing’ redundancies, the message to employees must accurately reflect this position. Have your senior managers understood this and what the implications are once the rules are triggered?
Pitfall #2. Falling short on employee reps….
There are quite prescriptive rules on who can be ‘appropriate representatives’ under the statutory rules on collective consultation. However, if there is no recognised trade union, employers might be in a position to choose between an existing standing body, or representatives elected directly by the affected employees. Think carefully if there is a choice and don’t just follow the ‘blueprint’ from a previous process.
Running employee elections with social distancing measures in place, or without the necessary IT may be fraught with difficulties. On the other hand, is any standing body of representatives really up to the job? Do they have the mandate required? Will there be enough representatives to keep the process moving if anybody falls sick along the way?
Pitfall #3. Messing up the logistics….
When it comes to running the redundancy process, Covid-19 will have a heavy impact on the way you manage both individual and collective employee consultation - particularly the logistics of communicating with your staff and holding meetings. Make sure that nobody is out of the loop or drops off the mailing list (virtual or otherwise).
Consider your options carefully regarding social distancing in the workplace for key announcements or meetings and, equally, how you will communicate with affected employees who are absent for a variety of reasons such as shielding, working from home, or if they are furloughed. For example, access to IT and timing of contact (bearing in mind home-schooling and childcare responsibilities) will need to be factored in to how you run the redundancy process.
Where managers and employee representatives need to get actively involved with HR in managing the redundancies, will their involvement count as ‘work’? If they are currently furloughed, can you bring them back to work? Government guidance has clarified that furloughed employee representatives may undertake collective representation duties but there are still some grey areas (we look at this point in more detail in our webinar Redundancies in the context of Covid-19).
Pitfall #4. Making redundancy selection a legal minefield….
Senior leaders may be focused on ensuring that selection criteria help the business to retain the essential skills that they need both during lockdown and after restrictions have been lifted. However, remember that discrimination laws apply to a Covid-19 redundancy process in the usual way. The process must be objective and thorough.
One particular trap to avoid is jumping to the conclusion that furloughed employees should automatically be selected for redundancy. Bear in mind that many employees have been furloughed because of their personal circumstances. For example, if an employee is shielding for medical reasons and the employer selects them for redundancy without following an objective process, the employer could easily find itself facing a disability discrimination claim.
Pitfall #5. Miscalculating redundancy payments….
There is a formula for calculating statutory redundancy payments which, ordinarily, would be relatively straightforward to apply. However, if employees have been on furlough, the calculation of their redundancy payment can become a much more complicated process involving looking at their working hours and how they are paid over a 12 week reference period to determine whether time spent on furlough (and hence furlough pay) should be taken into account.
With the Government having recently announced future flexibility in relation to furlough and gradual reductions in the level of payment, calculating statutory redundancy payments is likely to become even more complicated. Add to this a lack of clarity surrounding the treatment of accrued annual leave entitlements and notice pay for employees who have been on furlough and HR will definitely need to factor in extra time for crunching the numbers.
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