Date Published: 2nd April 2020

Redundancy during the coronavirus outbreak

Redundancy during the coronavirus outbreak
Redundancy during the coronavirus outbreak; Businesses are having to consider how to reduce costs as the country goes into lockdown. Employers should seek legal advice before making any contractual lay-off and short-time working provisions.

Coronavirus job retention scheme

With many company’s having to make redundancy’s the UK government has announced measures to help with this. The scheme is to help keep staff during the pandemic even if they need to temporarily shut. This scheme will impact many company’s decisions on redundancy’s and unpaid leave for employees.

Temporarily suspension on zero and reduced pay

This isn’t a black and white decision for companies. Companies will still need a clear contractual right to suspend employees. You should seek legal advice if you need to do so. If imposing suspension without agreement may result in claims against an employer.
Asking employees to stay at home temporarily on reduce pay would need a contractual change. If the contractual change is not processed, it may be a breach of the contract.  Employers in this situation should aim to be transparent with employees about the reason for the temporary suspension. As well as what potential alternatives might look like, including having to consider redundancies

Lay-offs and short-time working

If it is in your contract, then an employer will have the right to lay off an employee. This may be staying at home or taking unpaid leave. Short-time work is when you reduce an employee’s hours or paid less than half a week’s pay.
This may help to reduce redundancies, but it needs consent by the employee first.
This could be in:
  • their employment contracts
  • a national agreement for the industry
  • collective agreement between you and a recognised trade union
You may also be able to lay off an employee or put them on short-time working:
  • where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time
  • if you agree with the employee to change their employment contract to allow them to be laid-off or put on short-time working (this will not automatically give you the power to do this without their consent in the future)

Payment during short-time working and layoffs

Employees can receive a payment if you do not provide them with a full day’s work during the time they’d normally work.
The maximum payment is £25 a day for 5 days in any 3 months (i.e. £125). If employees usually earn less than £25 a day, they’ll get their usual daily rate. For part-time workers, the rate is worked out proportionally.

Can lay-off trigger redundancy?

There are terms within the lay-off scheme which can trigger redundancy. If the lay-off lasts for four weeks in a row, or six weeks in a 13-week period, employees can opt for redundancy. You can trigger statutory redundancy payment, in these cases.

Redundancy pay

Employees you make redundant could receive redundancy pay – this is ‘statutory redundancy payment’.
To be eligible, an individual must:
  • be an employee working under a contract of employment
  • have at least 2 years’ continuous service
  • Laid off, dismissal, or put on short-time working – those who opted for early retirement do not qualify
You must make the payment when you dismiss the employee, or soon after.
Statutory redundancy pay rates
These depend on a worker’s age and length of business and are checked back from the date of dismissal.
Employees get:
  • 1.5 weeks’ pay for each full year of employment after their 41st birthday
  • a week’s pay for each full year of employment after their 22nd birthday
  • half a week’s pay for each full year of employment up to their 22nd birthday
Length of service is capped at 20 years and weekly pay is capped at £525. The maximum amount of statutory redundancy pay is £15,750.
You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

Check out our latest blog on Recruitment and hiring during COVID-19; how it is changing the process

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