Redundancy in the Time of Covid

Posted on 11/02/2021 under redundancy, Uncategorized,

The news that almost 2,500 jobs are to be lost following Boohoo buying Dorothy Perkins, Wallis, and Burton in a £25.2m deal born out of the Arcadia Group insolvency is another blow to the retail sector already beset by Coronavirus-related redundancies. According to the latest labour market overview from the Office for National Statistics, in the three months to November 2020, the redundancy rate reached a record high of 14.2 per thousand, and the unemployment rate is predicted to hit 7.5% later this year.
Our Settlement Agreement Solicitors are regularly asked questions about redundancy and the Coronavirus Job Retention Scheme (the Furlough Scheme) and how these relate to Settlement Agreements. In this article, we provide answers to our clients’ most common concerns.

What is the Furlough Scheme?

To stave off mass redundancies, the government created the Furlough Scheme in March 2020. Its availability was recently extended to 30 April 2021.
An employee or worker can agree with their employer to be put on:
• full furlough which means they do not do any work for their employer at all, or
• flexible furlough where they work some hours and are furloughed for the remainder
Under the scheme, the government will pay 80% of an employee’s wages up to £2,500 per month.

What is the UK redundancy process?

The legal requirements of redundancy are governed by the Employment Relations Act 1996. Dismissing an employee is only considered valid via redundancy if one of three situations applies: business closure, workplace closure, and/or reduction of the workforce.
During the Coronavirus pandemic, redundancies must be carried out in the normal way. Employers must first assess how many staff they need to let go and examine alternatives to making redundancies. It could be arguable that if an employer failed to take advantage of the Furlough Scheme and instead made staff redundant then those redundancies would be unfair. It will be interesting to see how the Employment Tribunal decides on such cases. However, it is important to note that you can still be made redundant even if your employer has furloughed you.
If 20 or more employees are being made redundant over 90 days or less, an employer has a legal duty to consult with an appropriate employee representative and consultation must begin at least 45 days before the first dismissal where there are 100 or more employees. If there are fewer than 100 redundancies, consultation must begin 30 days before the first dismissal.
Even if there is no duty to consult, employees should receive appropriate notification that job losses are likely to occur.
The final step in the redundancy process is to calculate redundancy pay. If you want to check your employer has correctly assessed the money owed to you, you can use the government’s Redundancy Pay Calculator. You also need to check your contract to see if you are entitled to compensation over and above statutory redundancy pay.

Can I be offered a Settlement Agreement instead of redundancy?

It is common for employers to offer a Settlement Agreement instead of making staff redundant. As mentioned above, employers must comply with strict protocols when making redundancies or face claims of unfair dismissal. Therefore, the redundancy process can be complex and lengthy. A Settlement Agreement not only allows your employer to side-step the redundancy process, but it also removes the risk of you bringing a claim against them in the Employment Tribunal.
Entering into a Settlement Agreement may result in a more generous financial payment than what you would receive via redundancy; however, waiving your right to bring a legal claim may be disadvantageous to you long term. Therefore, it is imperative that you speak to a Settlement Agreement lawyer before you make any decisions.

What happens if I am furloughed and subsequently offered a Settlement Agreement?

You can be offered a Settlement Agreement whilst you are on furlough. Unlike redundancy, Settlement Agreements are voluntary arrangements. By instructing an experienced Settlement Agreement Solicitor, you may be able to negotiate not only for more money but non-financial benefits such as a career coach and/or the opportunity to keep your mobile phone and laptop.

In summary
Knowing that your current employment is going to end, whether it be by redundancy or Settlement Agreement is usually worrying. One wait to alleviate stress is to negotiate a generous compensation package. Instructing an experienced employment Solicitor is the best way to ensure your interests are robustly protected.
Have more questions about settlement agreements and redundancy? Call Settlement Agreement Solicitors today on 0800 048 5667 or fill in your details below to request a callback.