Business leaders are focusing on their workforces as we tentatively approach a post-Coronavirus recovery phase. Many are renewing their furlough arrangements following the UK government’s extension of the job retention programme, while others are planning staged returns for their staff as restrictions are lifted. Some are also inevitably planning redundancy dismissals as the uncertainty continues. There are many challenges facing employers in this scenario, and care is needed to avoid costly pitfalls. An important footnote throughout the UK government’s economic responses to the pandemic was a reminder that employees’ rights at work remained unchanged. This includes rights against unfair dismissal, maternity and other parental rights, redundancy entitlements and protection from discriminatory treatment. The furlough scheme, which pays employees 80 per cent of their monthly salary up to £2,500, has reportedly saved over 8.4 million jobs so far. But the government is now scaling back the scheme and although there is greater flexibility arriving in the form of a part-time furlough, employers will also have to contribute to the costs of continued furloughing from August. This will in turn make the scheme unaffordable for many struggling businesses. So what should employers be on alert about as they prepare for recovery? Here are a few essential pointers:
Changes should be agreed and not imposed
The furlough scheme was always intended as a temporary variation to employment contracts and most employees with more than two years’ service will have a right not to be unfairly dismissed. So those extending furlough arrangements or considering longer term changes, such as flexible hours, lay-off arrangements or pay reductions, should ensure these are made with the consent of employees and properly documented as contractual alterations.
Redundancy requires consultation
There are legal obligations to consult with employees before making redundancies. These are not prescribed where a business is planning a few redundancies, but there is still a minimum requirement to establish that redundancy is the real reason for dismissal and a dismissal is unlikely to be fair without prior warning and consultation. The requirements become much stricter where more than 20 redundancies are planned within a 90-day window, in which case dismissals must comply with the Trade Union and Labour Relations (Consolidation) Act 1992. Where an employer fails to consult collectively, the employment tribunal can make a protective award of up to 90 days’ pay in favour of affected employees.
Alternatives to redundancy
Where statutory consultation applies, an employer must consider ways to avoid redundancy dismissals. There is also a general duty to explore whether alternative employment can be found within the business. So if an employer chooses to make redundancies instead of furloughing staff while the scheme is available, they could face an argument that this was an unreasonable decision.
Furlough claims are open to scrutiny
The government has made it clear that furlough payments may be withheld or reclaimed where claims are based on inaccurate information or found to be fraudulent. There is also a dedicated whistleblowing line to facilitate reporting of employers abusing the scheme. So great care should be taken to ensure the scheme is accessed properly.
Avoid discriminatory decisions
Do not forget that the usual equality and discrimination laws apply when deciding which employees should be selected to return to work from furlough or for redundancy. Any criteria applied must be as objective as possible and there should be a rational business case underpinning the process. Employers should also ensure their decision is not influenced by financial considerations that could be discriminatory. For example, an employer furloughing a pregnant employee to avoid its health and safety obligations towards her or furloughing a disabled employee without their agreement to avoid making reasonable adjustments, would be at risk of claims of unlawful discrimination under the Equality Act 2010.
Ensure you have a safe workplace
The government has published ‘Covid-19 Secure’ guidelines to help businesses prepare for a return to work and these include carrying out a COVID-19 risk assessment, developing a hygiene plan and introducing a social distancing policy. Every employer should have regard to these measures before returning their staff to the workplace. These are all things for business leaders to keep in mind as they prepare their organisations for a return to the “new normal”. Employment claims can be time consuming, costly and harmful to business reputation but can generally be avoided with good advice and careful planning. Shilpen Savani is an employment law partner and a member of IR Global