Legal advice for employers as redundancies soar

Recent UK labour market data has revealed that redundancies reached record levels between September and November 2020 – the largest annual decrease in a decade. Meanwhile, February figures show there are now 726,000 less employees on UK payrolls than in February 2020 (although the larger falls occurred in the earlier months of the pandemic). Job vacancies also remain down, with 26% less jobs available to candidates between November 2020 and January 2021.

Although there are encouraging signs that this trend is reversing, with 83,000 more people on payrolls in January 2021 than December 2020, there is still a long way to go until businesses fully recover from the financial shock of the pandemic – meaning that more redundancies could be on the way.

Businesses still struggling financially

Following the unveiling of the government’s four-step plan out of lockdown on 22 February, trade bodies and groups representing UK businesses have wasted no time in calling for further support for those companies and workers most affected by the pandemic. While Prime Minister Boris Johnson stated in his speech that he would “not pull the rug out” beneath struggling businesses, firms face an agonising 10-day wait until the March Budget reveals exactly what support will be put in place.

With the plan keeping many businesses closed beyond the current furlough scheme end date of 30 April, and 4.5 million workers still on furlough, jobs and livelihoods remain suspended in the balance. So much so, in fact, that employers proposed 32,000 redundancies in January. While this is the second lowest monthly figure of the pandemic so far, it still means thousands of potential job cuts – and the consequent risk of legal action if employers fail to follow correct redundancy procedures.

Doing redundancy the right way

There is no easy way of telling an employee that they are losing their job, especially in the current economic climate. There is, however, a right and fair way to make employees redundant that does not leave you open to legal claims.

1. Try to avoid compulsory redundancies if possible – for example by seeking out candidates for voluntary redundancy or early retirement, or staff who may be willing to cut their hours instead.
2. If compulsory redundancies are necessary, it is vital to prove that you have not been discriminatory in your selection of candidates.

   Fair reasons include:

   1. skills, qualifications and aptitude
   2. standard of work or performance
   3. attendance
   4. disciplinary record

   Unfair reasons include:

   1. Protected characteristics under the Equality Act 2010, such as age, gender, disability or sexual orientation;
   2. Pregnancy;
   3. Family reasons, such as taking parental leave or adoption leave;
   4. Acting as an employee or trade union representative;
   5. Being a part-time or fixed-term employee.
3. You must consult with any employee you plan to make redundant. If you plan to cut over 20 jobs, there are ‘collective consultation’ rules you must follow, including:
   1. Notifying the Redundancy Payments Service (RPS) before starting the consultation.
   2. Consulting with trade union or employee representatives.
   3. Provide representatives or staff with information about the planned redundancies and give them time to consider it.
   4. Provide termination notices to affected staff, and redundancy notices once the consultation period is over.
4. You must give your staff notice of their redundancy within the required notice period. This notice period gets longer the more time the employee has been with the company
5. Your staff may also be entitled to statutory redundancy pay, if they have been with the company for over two years’ continuous service. Again, the size of the payment gets larger the longer the employee has been with the company, and the older they are.

Professional advice reduces the risk of claims

So, if you are planning to make redundancies this year, then it’s important to consult professional employment lawyers in the first instance to ensure that you’re following the correct procedures. To get in touch with our experienced Employment Law team, please contact Ahmet Ozcan on ahmet.ozcan@attwaters.co.uk.

Sources:

https://www.personneltoday.com/hr/redundancy-rate-hits-record-high-as-payrolled-employees-plummet/

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/february2021

https://www.gov.uk/staff-redundant