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Understanding the Coronavirus Job Retention Scheme & Redundancy

In a sense, lockdown was the “easy” bit. For many customer-facing businesses, there was little to do except discover Zoom and worry about the future. However, with most businesses now able to re-open, employers are faced with complex decisions not only as to when their staff can return but also as to whether they can afford for them all to do so. Here are the answers to some frequently asked questions:

1. “Business is picking up but it won’t be the same. Can I temporarily or permanently reduce the number of hours for all my employees or just some?”

It is very much your decision as to how your business is run and the direction it takes going forward. Flowing from that decision, there may be a need to make changes to their terms and conditions, including reduced hours or pay. All of this is possible with the employees’ consent. The key is to be open and honest with them and to explain the reasons for the proposals. Most employees at the current time will be relieved that they are not being made redundant. Where employees refuse to give consent, it may still be possible to implement the changes by consulting with staff, as above, and then giving them due contractual notice of the proposed changes.

2. “In mid-March, I reduced an employee’s hours from 5 days a week to 3 days a week due to the impact of the virus. I now need to make them redundant. Do I calculate redundancy pay based on 3 days a week or 5 days a week?”

Strictly speaking, the redundancy payment is calculated with reference to a “week’s pay” as it stands at the termination date – hence 3 days a week. However, where the reduction was regarded as a temporary measure, arguably, the correct measure of a week’s pay will be the original 5-day rate. If possible, err on the side of caution to avoid a potentially costly dispute.

3. “My staff are currently furloughed but I only need half of them back. Can I make the rest redundant?”

The furlough scheme does not supplant normal employment laws and so, as long as you have a business case for redundancy and follow fair procedures with regard to selection and consultation, you will be able to carry out redundancies. Note, however, that you cannot claim back the cost of redundancy payments from the furlough scheme and whilst it was initially thought that you could claim back the cost of wages during the notice period, the recent Treasury direction casts doubt on this.

4. “One employee is refusing to come back to work and wants to stay on furlough. They are enjoying having the time off. What can I do?”

The purpose of the CJRS was to save jobs in situations where lockdown restrictions would otherwise have resulted in unpaid leave or dismissal. The underlying purpose of the scheme remains and so where employers are able to resume operations and require staff to return, it is not in the employee’s discretion to refuse. To do so may lead to disciplinary action and dismissal. The only exception relates to the small number of individuals who are still required to shield or those who need to self-isolate. However, this presupposes that you, as employer, have taken all reasonable steps to maintain safe systems of working for the protection of staff upon their return, including identifying clinically vulnerable staff members and affording them safe spaces in which to work. Your health and safety adviser can assist with this.

This blog was written by:  Mark Higgins

DISCLAIMER: Please note that this post sets out the general position under the general law. It should not be acted upon in any specific circumstances without taking specific legal advice as to those circumstances. Also, it should not be relied upon, acted upon or treated as a substitute for specific advice relevant to particular circumstances. If you do require specific advice please contact us for assistance.