As the furlough scheme comes to an end, businesses affected by Covid-19 may have difficult decisions to take in preparing for the “new tomorrow”. Unfortunately, many employers will need to consider compulsory redundancies. Redundancy is a potentially fair reason to end employment and here are some key things to think about when considering changes: Is there a redundancy situation?
A redundancy situation arises where there is:
- closure of the entire business; or
- closure of the employee's workplace; or
- a diminished need for employees to carry out work of a particular kind in a particular place, eg a need to reduce headcount or a change of focus in the business.
In some reorganisations, the proposals may not automatically come within the strict definition of redundancy so these situations need to be considered carefully.
Is the selection pool correct?
Where only some employees will be made redundant, the employer needs to consider the selection pool - the particular grouping of affected employees at risk of redundancy - and how it will select employees from that group (or those groups – there is often more than one pool). Take care where employees perform similar but not identical work, where employees provide cover during periods of absence and where employees have similar skills or perform similar jobs.
Are the selection criteria objective?
As far as possible, selection criteria should be objective and measureable by reference to appraisals and employee performance. Avoid using any criterion which could indirectly discriminate (eg length of service might be indirectly discriminatory on the ground of age and sickness absence could be discriminatory on the ground of disability).
Reasonable adjustments may need to be made when applying selection criteria to employees with a disability, if a failure to do so would place them at a substantial disadvantage compared to employees without a disability.
You should not use furlough leave as a selection criterion as there is a risk of discrimination allegations, given it would include employees with caring responsibilities or disabilities meaning they had to shield (or living with someone with a disability leading to shielding). If performance is used as a selection criterion then the furlough period should not be taken into account (eg where the level of sales or output is relevant).
To limit subjectivity and consequent claims of personal bias/discrimination scores should, where possible, be based on objective and verifiable evidence and two managers should carry out the scoring.
A fair process
Collective consultation obligations apply where an employer is proposing making 20 or more employees redundant at the same establishment within a 90-day period, with a longer period for consultation where 100 or more employees are affected.
If 19 or fewer employees are affected by the proposals then collective consultation does not apply and the employer has greater flexibility as to the consultation process to be followed: eg it may be possible to complete consultation over a period of a few weeks.
We recommend that employees are given the right to be accompanied in consultation meetings – which may be held remotely – even though there is no statutory obligation to offer this.
There is also no statutory obligation to offer an appeal against redundancy. Nonetheless, it is best practice to offer an appeal to ensure a fair process and to provide the employer with an opportunity to address any procedural irregularities or issues which may have arisen previously.