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Redundancy: options and considerations for charities ahead of September 2021

Blog by Danielle White, senior HR consultant at Buzzacott.

A narrated version of this blog is available at the bottom of the page

The extension of the Coronavirus Job Retention Scheme (CJRS) until 30 September 2021 means that employers can claim 80% of an employee’s usual salary for hours not worked up until 30th June. Whilst the level of the grant will be reduced from 1 July 2021, the extension has been a welcomed lifeline to many organisations.

The current national lockdown is scheduled to ease on 21st June 2021 providing the roadmap is successful and coronavirus numbers continue to fall. With the scheduled closure of the CJRS in September, charities using this will need to review their financial plans. Typically, staffing costs are one of the largest expenses, and if you find your organisation needing to reduce its workforce, the following points should help you ascertain whether redundancy is necessary. And if it is, these are the steps to consider to make sure you remain on the right side of employment law.

Is redundancy really necessary?

Redundancy should be considered as a very last resort. And employment tribunals won’t be sympathetic if you’re making redundancies without exploring other options first. Employers are strongly encouraged to explore different options to avoid redundancies, such as encouraging applications from employees to work flexibly, offering unpaid leave or implementing temporary lay-offs.

If you decide there’s no alternative option other than to proceed down the redundancy route, you must be aware of the impact of the redundancy decisions you make. The importance of legal compliance and following HR best practice can’t be underestimated. A breach of employment legislation can result in expensive litigation and considerable reputational damage. 

What is a genuine redundancy situation?

You should ensure staff are selected for redundancy fairly, and that there’s a genuine reason for it. This avoids exposure to claims of unfair dismissal or discrimination (N.B. there is no qualifying period or length of service for making a claim of discrimination, this can happen at any time). You should be mindful that for an employee dismissed, the cap on compensation for unfair dismissal is £88,519 or 52 weeks’ salary; whichever is less. And for a discrimination claim, there’s no limit on the compensation that can be awarded.

Redundancy can be triggered by one of three situations:

  1. the closure of the business
  2. the closure of a workplace
  3. when the requirement for an employee to carry out work of a particular kind is no longer needed.

If there’s a change within your business strategy due to COVID-19, or if your charity is unable to employ staff due to financial strain, this constitutes a redundancy situation.

The redundancy consultation period

A redundancy process is never an easy or pleasant process for any party, but it’s even more challenging during these uncertain times. This means its important employers meaningfully consult with all employees who are potentially affected by redundancy. There’s no time limit for how long the period of consultation should be, but the minimum is:

  • 20 to 99 redundancies – the consultation must start at least 30 days before any dismissals take effect
  • 100 or more redundancies – the consultation must start at least 45 days before any dismissals take effect.

If there are less than 20 redundancies, there’s no fixed period of consultation you have to adhere to, instead it must be considered “meaningful”. In the event of a collective redundancy consultation, employers must also inform and consult with appropriate representatives.

During a consultation, employers will need to explain the reasoning behind the redundancies to all those affected, and give them the opportunity to express their views. They should be able to ask questions, raise any concerns they might have, and suggest alternatives. The requirement to consult doesn’t mean an employer has to agree with the employees’ views, however, it does mean that they must take their views into consideration.

As an employer, you may need to adapt your usual redundancy procedures to ensure the health, safety, and well-being of your employees (particularly as some employees might be on furlough leave). There’re also logistical issues to face, with social distancing meaning redundancy consultations are likely to take place remotely. Regardless of the location, proper consultation exercises are required as early and as practically as possible via video call, conference call or in writing in some circumstances.

Steps for you to take now

If you’re considering starting a redundancy process in the near future, there are some things you should do first:

  • ensure your organisation has a legally compliant redundancy policy and procedure in place
  • be really clear with communication throughout for employees who may be affected
  • ensure meaningful consultation is undertaken
  • familiarise business leaders/management on the procedure and the costs involved in making an employee redundant.

As a minimum, an employer must make a statutory redundancy payment (where the employee meets the qualifying criteria). Payments may also be required for any outstanding holiday, and payment in lieu of notice (PILON), where it‘s not possible for employees to work their contractual notice period.

Where an employer can’t afford to pay their employees’ redundancy pay due to insolvency, they can apply to the Redundancy Payments Service (RPS) for financial assistance.

How Buzzacott can help you with your redundancies

The Buzzacott HR Consultancy team can support your charity by providing tailored, practical solutions compliant with UK legislation. We provide commercially focused HR advice and guidance, making our clients aware of any potential risks that might be associated with the matter in hand. If needed, we can also be on hand to prepare the required documentation and be present during consultation meetings.

Unlike your typical outsourced HR solution, we’re experienced working with charities and not for profits across a range of sectors and understand your specific needs and requirements.

Get in touch with myself or a member of our team today to see how we can support you.

Whited@buzzacottco.uk / +44 (0)207 556 1224

Narrated by a member of the ACEVO staff

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