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Furlough, workforce reduction and managing employees

Due to Coronavirus (COVID-19), employers should aim to help reduce the spread and safeguard the welfare of their staff, while continuing operations as normally as possible. Read this guide for more information on managing staff during this challenging period.

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In light of the global health crisis, several businesses have experienced cash flow pressures and as a result, are seeking ways to effectively manage their costs. A major cost in many businesses is employees, meaning businesses have resorted to making employees redundant as a way to manage these costs.

It is important to note that making employees redundant should be the last resort. There are many alternative measures that you could consider to avoid making employees redundant.

Lay-offs are a temporary measure, whereby an employer provides employees with no work (and therefore, no pay) for a period while still retaining them as employees. Lay-offs tend to be used as a temporary solution to a problem such as shortage of work, or in this case, the impact of a pandemic. 

Short-term working, on the other hand, means providing employees with less work and therefore, lower pay for a period, while also still retaining them as employees. Like a lay-off, short-term working is a short-term measure often designed to deal with a shortfall of work. 

There are a number of difficulties with lay-offs and short-term working, including:

  • the need for express contractual provisions. In the absence of such provisions in an employee’s Employment contract, employees may claim constructive dismissal
  • potential claims for statutory redundancy pay by employees. Even if an employer has the contractual right to lay-off employees or introduce short-term working, employees may still be able to claim statutory redundancy pay where:
    • they have more than 2 years' service, and 
    • have been laid off or kept on short-term working for more than 4 weeks in a row/more than 6 non-consecutive weeks in a 13 week period

For more information, read Lay-offs and short time working.

Employers are contractually obliged to pay employees on terms that have been agreed in their employment contract.  A reduction in the rate of pay can only be achieved through an agreement with the employee or, in extreme circumstances, dismissing the employee under their existing terms and conditions and offering to re-employ them on the same conditions, but with a reduced rate of pay. 

In the event of a unilateral reduction of pay, employers run the risk of employees resigning and again, opening themselves up to constructive dismissal claims. There is also the possibility of claims for breach of contract and/or unlawful deduction of wages, which would render any post-termination restrictions imposed by the employer (eg non-compete clauses) void.

Requests

Some employers may have a Flexible working policy setting out the procedure employees should follow when requesting flexible working. 

Where employees wish to change their working patterns or work from home on a short-term basis (or as a one-off), employers are often open to agreeing to this on an informal basis. However, when employees seek to change their working patterns or work from home for an extended period, they usually have to make a formal request to their employer for flexible working and follow the procedure therein. Once flexible working is agreed with an employee, that arrangement should continue until further notice.

For more information, read Flexible working.

Working remotely

Some employers may not expect employees to work remotely, specifically:

  • taking their laptop home with them after work each day
  • accessing work emails remotely while away from the workplace

However, the global health situation warrants that employees work remotely if they can. Your IT department should be able to assist employees with remote working setup. 

Under the Coronavirus Job Retention Scheme (CJRS), which ran from March 2020 to 30 September 2021, 'furloughed' employees were employees who would have otherwise been laid-off during the crisis. Under the CJRS, employers in the UK were able to access support to continue paying part of these employees' salaries, therefore, keeping them on the payroll and avoiding the need to make them redundant. 

With the CJRS coming to an end on 30 September 2021, employers will need to consider: 

Employers will need to consider the usual equality and discrimination laws when making decisions about how and when to end furlough arrangements.

Employers will need to make sure that any claims for furloughed staff in September are submitted by 14 October 2021 and any amendments made by 28 October 2021.

Employers must also ensure that a record of the employee’s written consent and confirmation of furlough is kept by the employer for a minimum of 5 years.

Make your Recall an employee from furlough letter
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