UK: Business Life After Lockdown - Redundacy

As British business fights its way back to commercial life in the knowledge that a recession is imminent, there are a number of considerations that may soften the potential blow.  Andrew Bailey, the new governor of the Bank of England, commented at a discussion hosted by the World Economic Forum, "There will be elements of a faster recovery, because the first stage of the recovery is literally lifting restrictions and allowing people to go out." 

Mr Bailey believes that there are signs of recovery already evident.  Optimistic as Mr Bailey may be, he acknowledged there is highly likely to be long term damage and that it will take consumers far longer to slot back into their former lifestyle and spending habits.

The unwelcome news today from the Office of National Statics (ONS) that over half a million jobs have been lost due to the coronavirus pandemic and the accompanying contraction of the economy indicate that there is a long way to go before economic recovery is evident.  Restaurants and bars may find their former customers will be cautious about returning to their venues.  Despite the initial rush back to the shops, retailers will face a struggle to make their customers welcome at the same time being compelled to limit their ability to shop in the way they are used to.  Social distancing will drastically reduce the numbers of customers that can access services or attend events and customers may soon tire of the long queues and the restrictions on their shopping experience, with obvious impact on profits.

 Businesses large and small must not only use creativity whilst maximising new innovations to engage with their market, they must ensure the financial viability of their business which will almost certainly involve some very tough cost-cutting decisions. 

Now more than ever it is sound business sense to involve professional advisors in your tough decision making.  Daniel Theron, partner at Giambrone, cautions against making cost-cutting decisions around redundancy,  redeployment and reductions in hours and salary without being absolutely certain that there are no inadvertent discriminatory or any other breaches that can come back and cause major and costly problems at a later stage. All redundancy programmes must follow the usual procedures. For larger businesses, if more than 20 redundancies are being considered, a 90 day period followed by collective consultancies will arise.  Employees are still entitled to the following:

• Notice period, either worked or paid in lieu of notice whichever is the greater; their notice period will either be that in their employment contract or the statutory period of one week's notice per year of service to a maximum of 12 weeks, dependent on age and number of years of service. Consideration should be given to gardening leave.
• Their salary and other benefits accrue up until their last day.
• Payment in lieu of any untaken annual leave
• A statutory redundancy payment based on age, length of service and gross weekly pay, if they have been employed for two years or more.

During the course of lockdown a consultation with an employee may not be quite so straightforward.  Daniel Theron further commented "do not forget that redundancy means exactly that, the position is no longer viable or sustainable from a cost point of view and the position is redundant" he continued "if the position is re-instated too soon your former employee may have a case for unfair dismissal with the burden of proof resting on your shoulders, not on those of your former employee."  Daniel also warned against a trend that he has observed where businesses are being less than transparent in the way they are presenting the redundancy options to their staff. "I have noticed that some employers are presenting voluntary redundancy packages which are only slightly more beneficial than what the employee would be entitled to under the statutory redundancy package. In some cases there is a suggestion that the proposal is time-limited and will only be available for a brief period and require a speedy response."

An employer must walk a very careful path to avoid employment tribunal claims further down the line, trying to bounce staff into voluntary redundancy could backfire badly and in the present circumstances, things are already bad enough.