Dismissal and redundancies during the COVID-19 outbreak

On behalf of Attwaters Jameson Hill posted in Employment Law on Friday, April 3rd, 2020

During these difficult times, many businesses are struggling financially, and some are unable to continue paying their employees’ salaries. To avoid mass job losses, the government has introduced the Coronavirus Job Retention Scheme (CJRS), also known as ‘furlough leave’, through which employers can apply for government reimbursement of 80% of their employees’ salary costs up to a cap of £2,500 per month. You can read a detailed article on the CJRS, written by our expert Employment Law team, here.

But what other options can employers resort to if the CJRS is not suitable?

 

Other options for employers

While employers should make every effort to retain employees during this difficult time, the CJRS may not be suitable for all. You may decide that, even with the Scheme’s support, you cannot continue to run your business while retaining all of your current employees, or you may have to consider redundancies for staff who refuse to be furloughed. Once the scheme has ended, you may also realise that you are not in a position to recommence paying all your employees’ salaries straight away.

Below, we have listed some options employers could consider, advising on the legal implications of each.

  1. Redundancy

If you decide to make an employee redundant, you must be careful to avoid claims for unfair dismissal. This means you must follow the normal procedures for redundancy, without skipping any of the stages. As government support is now available, it is likely that your reasons for dismissal will be scrutinised very closely in any unfair dismissal case that does arise. Moreover, you should balance the cost of compensation against the cost of retaining your employee(s) with government support. It is crucial to consult an employment lawyer first to avoid the risk of financial and reputational damage to your business.

  1. Reduced hours

If you still need your employees to work, but cannot afford to pay their full salary, you may be able to ask them to work reduced hours for less pay (otherwise known as short-time working). However, you can only do this if the contract of employment allows it, or if you agree with the employee to change the contract terms. It is therefore very important that employees’ contractual terms are reviewed in light of any changes proposed.

  1. Annual or unpaid leave

Employers could also consider asking their employees to take unused annual leave or a period of unpaid leave. Again, this must be laid out in the employment contract or agreed with the employee in the first instance. Otherwise, again, you could face claims for breach of contract or unlawful deduction of wages. However, you may be able to enforce unpaid leave if, for example, your employee refuses to come into work (where they are still required to do so) without discussing it with you first, subject to any health and safety issues.

 

If in doubt, seek legal advice

During the coronavirus pandemic, employers should be looking to retain staff wherever possible. Businesses will need to be ready, along with their staff, to press on and return to normality, so it is hugely important for all parties to work together now. It will also save you from financial hardship in the future, when normality returns, and where your business will need to hit the ground running.

However, if other options do become necessary, then you must obtain legal advice before acting. Claims for unfair or constructive dismissal, deduction of wages or breach of contract, among others, could be financially damaging to your business at a time when it is already suffering. Just contact our Employment Law expert enquiries@attwaters.co.uk or call 0330 221 8855.

 

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