Settlement Agreements expected to become more widely used.
The government’s Job Retention Scheme (JRS) has provided a lifeline for numerous businesses, enabling them to retain staff through the Covid-19 pandemic even if business levels have fallen away.
But despite the enormous funds that the government has committed to the JRS – estimated at over £35bn by the middle of August – over 300,000 redundancies were still planned by employers in June and July, according to the BBC.
Now, with the furlough scheme set to close at the end of October, many more employers will be weighing up difficult decisions about the implications for their workforce. For some, business may have come back sufficiently to enable them to resume normal operations. For others, the reality may be that redundancies are unavoidable. This could apply to businesses across the spectrum – almost every sector has been affected in some way by the pandemic.
Looking ahead, exploring the alternatives
For those businesses that need to reshape or reduce their workforce, my advice first and foremost would be – don’t put off addressing the problem. Making redundancies is something that no employer ever wants to do, but failing to tackle the issue in a timely and structured manner can often make it worse.
Addressing the issue as far in advance as possible means that an employer can fully explore other alternatives to redundancies first. For example, it might be possible to agree variations to individuals’ employment contracts such as a reduction in salary or in hours. This itself is a process that would require time, consultation and dialogue.
If this is not feasible, or if redundancies will still be needed in addition, then it is essential to factor in the consultation periods required. If more than 20 jobs are to be cut within one establishment, there must be a consultation period of 30 days; if more than 100 jobs are to be lost, this rises to 45 days.
Given that many businesses will be looking to coincide any job cuts with the end of furlough on 31 October, then clearly consultations need to start by mid- or late September, depending on the number of staff involved. It is also possible to use the grants received under the JRS to pay the notice period salary of an employee on furlough.
Running consultations remotely
The fact that many employees are working from home, self-isolating or on furlough, means that consulting with staff is likely to raise some challenges. Despite these potential difficulties, employers must still undertake a consultation process before any redundancies are made. Although the preferred process would be to carry out consultation face-to-face, there is no legal requirement to do so. As such, consultations can take place over the phone or video conference if both parties agree to it and there is a clear need to do so.
If collective consultation duties have been triggered, the employer’s duty is to consult with representatives of affected employees. Once these representatives have been nominated, an employer’s consultation obligations will become much easier to manage.
Employers will need to ensure all participants have access to suitable IT equipment with video conferencing facilities available. They may also need to facilitate arrangements for employee or union representatives to be able to liaise and communicate with their colleagues or members remotely. These practicalities may require IT support to be provided to participants and may also require employers to factor in longer timescales for the consultation process.
Settlement Agreements may become widespread
The redundancy process is often complex and intensive, with employees or their representatives coming back with multiple different questions or issues, often through a string of different solicitors acting on their behalf.
But one way of simplifying and streamlining the process – whilst also providing enhanced support to employees themselves – is through large scale settlement agreements. I expect these to be widely used in these coming months.
If an employer is offering enhanced redundancy packages, ie above and beyond the statutory minimum, settlement agreements can be an effective model. The agreement sets out the terms of the package for an individual, who waives their right to make any future claim for an existing issue or grievance.
Under a large scale settlement agreement process, a template agreement can be negotiated and agreed which each individual employee can then sign. A firm of independent legal advisers runs the process and provides advice to employees which is paid for by the employer. From an employer’s perspective, this is far more cost effective than dealing with a number of solicitors separately engaged by employees.
Through this streamlining and centralisation, the process usually runs more smoothly whilst also offering a high level of support to individuals affected.
Multiple issues ahead
Another widespread matter that will need to be carefully and sensitively managed is the possibility of an employee refusing to return to the workplace due to virus-related concerns even if adjustments have been made to make the workplace compliant with Covid-19 safety guidelines. We strongly recommend that employers seek specific legal advice before disciplinary action is taken in any such cases, especially if an employee is clinically vulnerable, disabled or pregnant.
The coming months may be a difficult period for many employers. It is essential, as far as possible, to explore all available options, plan ahead and take a structured approach – for the benefit both of the business itself and its staff.