How does the Coronavirus Job Retention Scheme impact on redundancy procedures?

On 20 March 2020, the UK Government announced the implementation of the Coronavirus Job Retention Scheme, to help businesses deal with the economic consequences of the Coronavirus (COVID-19) pandemic and consequent social distancing measures in force.

The Scheme was intended to enable businesses to retain staff whom might otherwise have been made redundant, and to support employers to retain their employees and protect the UK economy, ready to resume business ‘as usual’ when the restrictions are lifted.

The Scheme allows organisations to place employees on “furlough” and reclaim 80% of their usual monthly wage costs from HMRC, subject to a cap of £2,500 per month. The Scheme was due to run until 30 June 2020, but has now been extended to October, although the full details have yet to be published. The Chancellor has reported that as many as 7.5 million people in the UK have been furloughed to date, with a projected cost to 30 June 2020 of nearly £40 million. The Chancellor has also indicated that the Scheme is not sustainable; it costing the equivalent of the money paid for running the NHS in the same period.

Whilst the Scheme is in place, the usual rules around redundancy will apply. However, as the Chancellor looks to withdraw or perhaps amend the Scheme to place more of the financial burden on employers, redundancy will become a very real prospect for a lot of businesses.

Amongst other factors, businesses will have to consider:
• Logistical issues – how it will undertake the consultation processes remotely with staff who are furloughed?
• Are their pooling and selection criteria fair – for example is it proposing to select staff for redundancy based purely on the fact that they are furloughed?
• Staff might be entitled to be paid their full salary during their notice period and for any annual leave taken during their notice period.
• Redundancy dismissals may be considered an unfair dismissal, if they take place in circumstances where an employer could have retained the employee on furlough for longer.

If your business is embarking upon the redundancy process, or you are an employee facing redundancy, Stokes Partners LLP has expert solicitors who can advise you. This article is for information only, and does not constitute legal advice.