How to handle redundancies caused by COVID-19
COVID-19 has affected businesses both big and small whether through logistical issues that impact their output or through the loss of clients and subsequent revenue.
Despite the measures brought in by governments such as grants, schemes and furlough – the losses caused by the pandemic will leave many companies facing the difficult decision of making employees redundant.
To get the best out of this situation for both employer and employee, there are a few things to bear in mind. A proper redundancy procedure still needs to be followed regardless of the unprecedented circumstances we’re in – this will reduce the risk of the decision being ruled an unfair dismissal. To ensure that your redundancy decisions aren’t unfair you need to ensure you provide plenty of warning to allow for appropriate consultation periods, use a fair selection process when determining candidates for redundancy and that all alternatives to redundancy are considered.
Communication is key when it comes to the redundancy procedure. As soon as the company announces that it is considering making employees redundant, the consultation process should be ready to start. Ensure that all of your communications around this topic – even simple things like comments on social media – are run past your HR team to ensure you are prepared to start this process. While lots of companies have good intentions by keeping their employees in the loop about these possibilities, making these announcements before your managerial team is prepared to answer any questions and provide necessary support can lead to more stress for everyone in the company.
The consultation process may also differ during times of social distancing and working from home – especially if members of your team are staying out of the normal workplace for health or childcare reasons. Often, these meetings take place in person out of the way of distractions and other responsibilities – however these may now need to take place remotely whether that be through a voice call or a video call. Regardless of which method you use this should be well planned to ensure that the employee can focus on the call without being distracted or rushed e.g. by childcare commitments or home deliveries.
When you’re assessing which employees are candidates for redundancy, you might be inclined to think of those on furlough first – however we would strongly advise you against this. There are a number of reasons that could have contributed to a employee being placed on furlough beyond simply their value to the company. Assessment criteria should be created in a way that all employees can be measured against equally regardless of their current work status. Clearly communicating this process to your team will help them to understand your ultimate decisions and allow for recommendations to be made to improve the assessment criteria from all areas of the business.
These are undeniably hard times for a lot of businesses but redundancies are not the only option left for those who are struggling. There are a number of grants and loans that can be applied for to support businesses in the short term, employees can be kept on furlough until the end of October 2020 or it may even be an option to discuss fewer hours or reduced salaries with your employees in the interest of keeping them in work. You will need to ensure that you have thoroughly considered all alternatives before making the decision for redundancy – this will ensure that any dismissal is fair and reassure your employee that you’ve considered all options.
From 1st July 2020, the Government have stated that redundancy pay should be based on the employees full pay amount (i.e. pre-furlough). We recommend getting in touch with an expert to help you with this process to ensure no mistakes are made.
Then there’s the issue of continuing to claim furlough pay while someone is serving redundancy notice. Technically, according to the HMRC, you can claim the furlough grant for someone on notice, however since the point of the grant is to continue an individual’s employment (i.e. to retain jobs) it could significantly damage your business’ reputation to both potential employees and customers.
Redundancies can be stressful for employees at any time let alone in the current climate. Although this is a business decision, remember that this will impact the employee’s life on a number of financial and personal levels. Try to be compassionate and consider how their mental and physical health could be affected. For this reason we tend to recommend that you use video calls rather than voice calls so that both parties can see the emotion on the other’s face and gain a deeper understanding of what they’re feeling. Providing support and advice through an employee benefits programme or by sourcing a service specifically for the redundant staff can be a great way to ensure your employees are looked after. You might also want to consider helping them move forward with outplacement support – not only will this further protect their mental health and livelihood, it can also be great for your reputation by demonstrating your sincere interest in your employees wellbeing.
There is never an easy way to handle redundancies – with COVID-19 only adding more stress for both employers and employees. If you need support with any aspect of the redundancy procedure, feel free to get in touch with our specialists for advice.