Redundancies: Employers face a raft of employment tribunal claims if they fail to consult furloughed employees

With one in five British workers currently furloughed, businesses will have some tough decisions to make once the scheme ends or even before it ends in some instances. Employers are being warned that they risk being taken to an employment tribunal if they fail to consult furloughed employees before redundancies are made.

“Employers would be mistaken if they think that as soon as the government scheme ends, they can make employees redundant. All the same rules apply to furloughed workers as they do to ordinary workers. Businesses failing to consult with any employee, even if they are on furlough, will be at an increased risk of being taken to an employment tribunal,” says partner Alison Loveday.

“The legal process you need to follow is guided by how many people you intend to make redundant, but it’s good practice to fully consult regardless of the numbers involved,” says Alison. “Employers making 20 or more people redundant must follow a collective consultation process. An employment tribunal could decide that you’ve dismissed your staff unfairly if you don’t.”

Alison outlines the collective consultation process below:

Collective consultation process:

If you are making 20 or more people redundant, you must notify the government’s Redundancy Payments Service (RPS) prior to starting a consultation at least 30 days before the first redundancy.

If you are making 100 or more people redundant, you must allow 45 days to notify the RPS.

“Failure to notify the RPS can result in unlimited fines, so this is a critical step,” explains Alison.

Employers should then consult with trade union representatives (reps) or elected employee reps (holding elections where necessary) or directly with staff if there aren’t any reps.

“When you notify individuals about redundancy, regardless of whether it is one person or 100, you should protect yourself from claims of unfair dismissal by clearly outlining your business case for the proposed redundancies. This should include the reasons for having to consider making redundancies, the number of potential redundancies, how you plan to select employees for redundancy and the financial compensation each ‘at risk’ employee will be entitled to.

“Subject to complying with the time periods referred to above for collective consultation, how long a consultation process should last will largely be governed by how much there is to consult about. For example, if there are lots of opportunities elsewhere in the business for alternative employment, then much time may be taken up in the consultation process considering how any such roles can be offered out fairly to the pool of at-risk employees.

“However, it is critical that employer’s factor in that communicating with furloughed employees may take longer than usual as the affected employees are not working in the business on a day to day basis and meetings may have to take place remotely – for example via video conferencing. Ensuring that consultation meetings are set up in an appropriate way, with additional support being made available to employees who may be upset by the process, will be essential.

“The consultation process is an important step which provides an opportunity to test the business case and see if there are any ways to avoid redundancies, which have been overlooked. If redundancies can’t be avoided, then employers should identify how the employees will be supported financially and personally through the redundancy process. An employer’s failure to properly engage in the consultation process and treat its employees fairly could be costly, exposing it to potential claims for unfair dismissal and damage to its reputation – both within the business, and externally with customers and suppliers,” Alison says.