Figuring out Furlough

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Ilan Braha and Jason McKenzie shed some light on the rules around furlough. Can furloughed staff be made redundant during the coronavirus job retention scheme (CJRS), or not until its end date in September? Legally, what is the position and what are the correct procedures?

The starting point is an employer can make furloughed staff redundant.

Unlike salaries, redundancy payments cannot be claimed back under CJRS. Employers will need to balance the expense of redundancy payments against the increased expense in salary contributions required by CJRS from 1 July 2020.

If the conclusion is redundancies are commercially necessary or the affected employees’ roles are genuinely no longer required, the redundancy process can begin.

The procedure depends on how many redundancies are likely.

If the redundancies are for 20 employees or more, there is a legal requirement to consult with the union (if one is recognised); otherwise, employee representatives must be elected. The secretary of state must be notified.

If the number is fewer than 20, employers will only need to speak with the employees affected, unless their redundancy policy has additional consultation obligations.

It's important that being furloughed must not count against an employee when considering possible redundancies

Employers must consider the appropriate pool of employees (if selection is necessary) and establish a proposed set of objective selection criteria to score employees against.

It is important that being furloughed must not count against an employee when considering possible redundancies or carrying out the scoring exercise. Employers must then write to those in the pool (‘the candidates’), explaining why redundancies are necessary, how many, and who else is considered, and the proposed criteria, process, and timetable.

Special rules apply to employees who are pregnant or on maternity, adoption or shared parental leave. Employees must be advised of their right of accompaniment to meetings by a trade union representative or work colleague.

The candidates should be invited to a meeting. At the meeting, the nformation in the preceding letter must be explained and candidates reassured that ways of avoiding redundancy are being explored. It must be made clear – redundancies are only a possibility at this stage.

Suggestions of ways to avoid redundancies should be requested and, if suggestions are sensible, followed. Consider asking for redundancy volunteers. The scoring exercise is then completed. Scoresheets should be sent to candidates (with anonymised scores for others, or confirmation of which quartile they are in) with the minimum score for avoiding redundancy.

Everyone below the minimum should be invited to another meeting to review their scoring and allow them to explain whether they think they have been underscored. If they need to be re-scored, this may move them above the minimum, replacing another candidate. If so, hold a second meeting with that candidate.

If their comments are not accepted, a note must be kept of the reasoning.

Explain again no final decision has yet been made. If there is no suitable alternative employment and scores remain below the minimum, candidates should be invited to a final meeting, informed they are now chosen
for redundancy and are being given notice.

Employees can take time off to seek new employment and can still suggest an alternative position with the company.

This is the time to explain the calculations for the redundancy payments and confirm their last day. If they have holiday outstanding, consider inviting them to take it during the notice period. The right of appeal must be communicated, with an explanation of how and the deadline.

All meetings should be followed up and confirmed to employees in writing. It is a difficult time for employees and employers. It is important to follow the procedures to ensure fairness, transparency, and legal compliance for
all concerned.