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The Government have confirmed their phased plan to ease lockdown measures in the coming months in their bid to actively encourage employers to return their workforce and make the first steps to restart the economy. On 11 May, the Government published its COVID-19 strategy which outlines a “roadmap” for how and when the UK will adjust its response to the COVID-19 crisis. The Government also published new guidance to businesses across various sectors advising on how they should return to the workplace and continue to operate in the coming months.
Throughout the period of lockdown, many businesses have been reliant on the Government’s Coronavirus Job Retention Scheme (CJRS) – part of a range of packages designed to avoid redundancies during this difficult and unprecedented time. The CJRS, which was due to end on 30th June 2020, has now been extended to the end of October 2020. The Government has announced that the terms of the CJRS will be amended to require employers to fund part of the cost of the scheme themselves from August onwards. Further information is awaited on this point.
Despite the Government’s initiative to encourage employers to reopen their workplaces and return to work, due to the commercial and financial impact caused by the COVID-19 pandemic many businesses may find that they cannot fully retain their workforce once the CJRS comes to an end, or afford to part-fund the cost of their furloughed employees (if and when this change is introduced to the CJRS).
In this guide, we have collated some key considerations employers should consider when restructuring their workforce and considering whether redundancies are necessary.
Any decision to reduce the contractual hours and pay of an employee is a change to the contract of employment and an employer is likely to need the employee’s consent. Unilaterally imposing a change would expose employers to a serious risk of claims for unlawful deduction of wages, breach of contract and potentially unfair constructive dismissal.
Similarly, imposing alterations to working arrangements, including new shift patterns, altered hours of work or place of work may amount to a breach of contract and potential claims of constructive dismissal and even discrimination.
Occasionally, contracts of employment will contain flexibility clauses that provide employers with the ability to unilaterally vary the employees’ hours and pay and other working arrangements. However, employers are urged to exercise caution when relying on such clauses as their use is narrowly permitted by the courts. It is essential that employers seek legal advice before taking any action to change the terms of an employee’s contract relying on such a clause.
Best practice for employers is to engage in early discussions with their workforce regarding any proposed changes and where appropriate seek volunteers. Employers should fully explain the business reasons to their workforce as to why changes are necessary. Many employers may find that their workforce responds positively to the prospect of reducing their hours and pay when redundancy or business closure may be the alternative options.
Existing employment law continues to apply including to those employees on furlough leave, and any employer considering redundancies must satisfy the correct legal requirements. To assist employers we have prepared a short guide to redundancy:
Some critical considerations include the consultation timescales involved when mass redundancies are proposed:
It is essential for employers that any plans to restructure their workforce are made early and legal advice is sought before any action is taken to make employees redundant.
Due to the rapidly changing nature of the Covid-19 pandemic, the Government’s CJRS guidance is continually redefined. The latest changes to the HMRC guidance was published on 30th April and 7 May, and, amongst other things, confirmed that 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 while furloughed, provided that they do not provide services to or generate revenue for or on behalf of the employer.
We recommend that employers keep checking to ensure that they are following the most up to date guidance, particularly as there are still some unanswered questions about the CJRS. Further, in addition to public guidance, there are always specific circumstances that individual employers must consider, such as a particular employee or employer arrangements or issues (contractual or otherwise). If in doubt, please take advice.