31 July 2020
We answer six key questions on how the coronavirus pandemic affects redundancy consultations.
Is redundancy consultation permitted at all during a furlough reclaim period?
Whilst there is no objection to this in terms of employment legal rights, most organisations are concerned about its impact on their coronavirus job retention scheme (CJRS) reclaim and on their ability to retain any reclaimed sums. You can conduct redundancy consultation with affected employees whilst claiming the CJRS grant for reimbursement of their wages cost.
Which redundancy costs can be claimed for under CJRS?
CJRS has consistently said 'Grants cannot be used to substitute redundancy payments'
However HMRC’s CJRS Policy Communications and Stakeholder Engagement Lead has now confirmed to RSM’s People Advisory Services team that : 'You can continue to claim for a furloughed employee who is serving a statutory or contractual notice period, however grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.
- CJRS does not change the normal rules and arrangements in respect of redundancy notice periods, or the level of pay that employees are entitled to during their redundancy notice period. These may be governed by statutory or contractual rules.
- Employers can continue to claim for a furloughed employee who is serving a notice period.
- The level of CJRS grant that can be claimed, towards pay during any redundancy notice period, follows the same rules for calculating a CJRS grant during an ordinary period of employment.
- All of the grant must be paid over to the employee.
- If the employee is entitled to more pay during their notice period than is covered by the grant, then the employer must make up any difference
- CJRS grants cannot be used to substitute redundancy payments.'
It is now clear that once an employee has been made redundant, and is no longer serving their notice period, the employer cases to be eligible for CJRS grants for that employee. Therefore payments in lieu of notice (PILONs) and payments for accrued holiday which is untaken by the termination date cannot be claimed.
Is redundancy consultation with elected representatives excluded from the definition of working during furlough?
From 30 April the CJRS made it clear that whilst on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. However, in doing this, they must not provide services to or generate revenue for, or on behalf of the employer organisation or a linked or associated organisation.
If employees are furloughed and so not in the workplace, how do the consultation communication lines work?
Employees who are furloughed must not provide services to or generate revenue for, or on behalf of, the employer organisation or a linked or associated organisation. They will have been instructed by their employer not to work and likely not to review work emails. Effective methods of communication such as obtaining personal email addresses or mobile phone numbers will be needed to reach employees on furlough. Then consultation communication via online platforms will need to be used. Timings of processes will need adjustment to allow for these logistical challenges.
Data protection policy consents may also need refreshing if employers need to allow employees’ elected redundancy consultation representatives to have staff personal email addresses
What is the pay rate if notice is served during a period of agreed reduced pay furlough leave?
This is an area where employment law gave quite complex answers dependent on the interplay between the statutory and contractual notice period. Government changed the law from 31 July at under 24 hours’ notice. If an employee is furloughed during their notice period at a pay rate other than their (pre furlough reduction) normal salary rate, for terminations taking effect on or after 31 July, the week’s pay calculation for statutory notice and for a statutory redundancy payment disregards any reduction in the amount payable as a result of the employee being furloughed.
Can an employer terminate an employee’s employment for redundancy by giving them notice of termination if they have furloughed them and would be able to continue to claim for them until the scheme ended?
The CJRS says: 'when the Government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy)'.
This needs to be determined by assessing a number of factors. CJRS does not expressly prohibit terminations before the scheme ends. Nor does employment law. Consideration should also be given to whether the furlough agreement expresses or implies an obligation to continue the employment whilst the grant relief support for wages is available.
For more information, please contact