Changes to Redundancy

With businesses across the UK ready to make a comeback after the Coronavirus Pandemic, many will seek to streamline their organisational structure to adjust to the new world of business post lockdown. With this restructuring often comes the challenging minefield of the redundancy process. Up to 43% of UK employers admit that they would not be able to navigate the redundancy process in line with the law by themselves. Legislative changes to adjust for the CJRS can make even an experienced manager’s knowledge of redundancy outdated. Furloughed employees who are made redundant, post 31st July, will be entitled to redundancy pay based not on their furlough rate, but on their usual wage.

This legislation was introduced to stop employers attempting to pay redundant employees severance payments based on furlough pay (80% of normal pay, capped at £2,500 a month), rather than their usual contractual wage. If an employee has more than two years’ service, their Statutory redundancy pay calculation is based on average weekly pay over 12 weeks - combined with factors such as age and length of continuous service. In light of the new legislative change, employers must regard any weeks an employee spent on furlough over the 12-week reference period as if they were working on full regular pay. It is worth noting that any redundancy payments already made before 31st July will not be covered by the changes.

In the case of redundancies, mitigating litigation exposure should be at the forefront of any HR professional’s priorities. HR teams and employers must be mindful of the rights applicable to at risk employees, as well as their obligations to consider alternate employment. In any case, employers are often quick to streamline their organisation structure, but put themselves in a position of risk for unfair dismissal claims by going into the redundancy process without up-to-date HR support. Whether it’s delivering the news to at risk staff in a supportive way, to providing ad hoc support or advice, getting the right HR support can ensure that you can navigate the redundancy process with confidence.

If you require support around dismissals or redundancy, or if you want to find out how Amica HR can work in partnership with you to benefit your business, you can contact a member of the team on 01522 370190 or send an email to info@amicahr.co.uk .