Whilst the furlough scheme has been well received, many businesses are now looking ahead to what the future looks like and some may need to implement cost-cutting measures, including redundancies or asking staff to take annual leave to address a downturn in work. Below is a short explanation of some key issues employers should consider if they are considering such measures.
Redundancies whilst furloughed
Guidance from the government makes clear that employers can make redundancies whilst their employees are furloughed. However, it will be necessary to consider and follow the normal legal processes and procedures.
Employers will need to be mindful not to act in a discriminatory way in deciding who to keep furloughed or employed and who to make redundant. A fair and objective selection criteria should be used to identify those at risk, and that criteria should not be based on any discriminatory factors.
Notice
The guidance is silent on notice periods for dismissal, including redundancy, whilst employees are furloughed. However, as the scheme is subject to existing employment law the employee will need to be given their contractual or statutory minimum notice period, or a payment in lieu of that notice where permitted.
However, employers should be mindful that payments in lieu of notice are not recoverable under the job retention scheme so it may be preferable to keep employees furloughed for the duration of their notice period so their pay remains potentially partially recoverable.
The question remains as to what level of pay should be paid during a notice period on furlough and this will depend on a number of factors so please ask us if this is something you are considering.
Consultation
In a redundancy situation, the employer has certain obligations to consult with employees depending on the amount of employees they propose to make redundant. The guidance makes clear that employees are able to continue to carry out trade union duties whilst furloughed, so will be able to engage in collective consultation if necessary and this will apply to individual consultation as well.
Annual leave
Employees continue to accrue holiday whilst on furlough. If an employer gives more than the statutory minimum of 5.6 weeks as a contractual entitlement, this could be reduced to the statutory minimum by agreement with the employees.
Any annual leave that an employee has not been able to take due to the pandemic can carry over a maximum of 4 weeks of holiday into the next 2 holiday years.
Employers are able to require that employees take annual leave at certain times. To do this, the employer must give the employee at least twice as much notice as the holiday they want the employee to take. For example, if you require an employee to take 1 week’s holiday, you must give them at least 2 weeks’ notice.
For further information on managing employees on furlough, or to discuss the issues raised in this article, please contact Herrington Carmichael’s Employment Department on 0118 977 4045 or employment@herrington-carmichael.com
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
