The coronavirus pandemic has understandably caused a fair amount of disruption for businesses. In turn, the speed that organisations are making decisions on their employee’s future is accelerating. However, this could be increasing the risk of employers being exposed to claims on unfair dismissal.
Many businesses will have access to legal advice or professional HR support; however, many smaller employers may not. The desire and need to move quickly can lead to some key steps being overlooked and the business being exposed to unfair dismissal claims. This article outlines the main risks employers must be aware of.
When deciding to make a part of a workforce redundant, it is essential that businesses follow a fair process. It is unlikely that an Employment Tribunal would excuse an employer for failing to follow the proper process because of the Coronavirus pandemic.
Therefore, it is important for employers that they give adequate consideration to the following things:
- Establishing pools for selection for redundancies
- Deciding upon fair and objective selection criteria
- Fairly applying that criteria
- Consulting with employees and considering alternative employment before making employees redundant.
Employers could justify undertaking these steps in a shorter timescale than they usually would, although it is essential that each step is still taken.
Changing employee’s terms and conditions of employment
Employers may be considering placing employees on furlough leave or reducing employee’s working hours or pay to limit any long term loss of employment. Any attempt by an employer to impose a reduction to an employee’s pay without getting prior consent will give grounds to the affected employees to terminate their employment. They will also be able to bring claims for unfair constructive dismissal.
Laying off employees without a contractual right to do so
Some businesses will have a ‘lay off’ clause in their employment contract that entitles them to lay off an employee without pay for an indefinite period.
Where a ‘lay off’ clause isn’t present, employers do not have a contractual right to lay off an employee without pay, and doing so will give an employee the right to terminate their employment and bring a claim for constructive unfair dismissal.
If employers have a lay off clause in their contract, they have the right to lay off employees without pay and can decide only to lay off a proportion of the workforce. Similar principles to the redundancy selection process apply; employers who act with haste and without any consideration to a fair process are likely to face claims for unfair dismissal.
Deciding who to place on furlough leave
If part of the workforce is being placed on furlough leave, it could create disputes among staff, stemming from why some employees have been chosen for furlough leave and others have not. To avoid any future claims for unfair dismissal, employers should be able to justify why each employee has been selected and have obtained their consent before placing them on furlough leave. Selecting employees for furlough leave on an arbitrary basis may create problems for the future.
Failing to engage in collective consultation
An employer must consult with employees or their employee representatives if they are proposing to make 20 or more employees redundant at any one establishment.
The collective consultation rules apply if an employer wishes to vary their employees’ contracts of employment and there is significant opposition to the proposal from the workforce.
The penalty for failing to comply with these obligations can be costly, 90 days pay (uncapped) for each affected employee. We have not yet seen what view the Employment Tribunal will take when considering the current COVID-19 outbreak, but it is unlikely that they will rule in favour of a business that failed to follow the collective consultation procedures. There will be a range of different circumstances depending upon whether, a business has been forced to close down suddenly or there has been a gradual reduction in revenue.
It is essential that employers recognise that throughout the current crisis, they will still be required to adhere to the relevant legislation concerning unfair dismissal, redundancy and collective consultation.
Employment law and employee rights have not been suspended.
Our employment law team are on hand to advise and support you. Whether you are an employer needing guidance or an employee who thinks their employer may have acted unlawfully, please contact email@example.com or call us on 01296 318 500