Ask us – restructure decisions during lockdown
I have a business that has been forced to close due to lockdown. I have a team of 10 employees who are all furloughed. I would imagine that when we are allowed to open again, levels of business will be much reduced as buying habits will have changed. I know I’m going to need to make staffing changes in line with the changes that I will need to make in the business. I’m just not sure when I’ll know the detail of what I’ll need to do and when I should therefore begin this process. Can I do it while my employees on furlough? Or should it be only once I am allowed to open again?
Firstly, I’m sorry that your business has been affected in this way. I hope that in time and with your new business plan you are able to return to and even exceed your usual levels of business.
For your restructure plans you are required to consult with your workforce as soon as you are clear on the impact it will have on them. It sounds like you don’t have all the information you need just yet, but sometimes you need to take your best guess in order to create and progress your business plans. Your plans may not necessarily mean redundancies; it may mean there are just changes to terms and conditions such as duties and working hours.
Where there is a need for contract changes and/or potential redundancies there is a requirement to consult with affected employees. This is on the basis that it is only fair that the people potentially being affected by change are involved to some extent in the decision-making around that process. They may make suggestions that you have not considered that you could build into your plans. They may also be willing to make changes to their working arrangements to avoid redundancy.
From the furlough scheme perspective, it is a job retention scheme designed to keep people in employment and as such the scheme rules changed on 1 December 2020 to state that an employer may not claim for employees that are working their notice. So should redundancies be an outcome of your consultations, it is not the intention of the Scheme for it to be used once that decision is made. You may wish to delay finalising your plans and beginning the consultation process when you re-open or when the furlough scheme ends. You will be better informed of your business levels and needs at that point in time too.
Use of the furlough scheme does not preclude you from conducting consultation meetings (it is not work per se, and can be conducted remotely), so you could start consulting as soon as your business plan is finalised. During consultation, redundancy decisions are not yet made, but should you reach that conclusion you could give notice whilst your employees remain away from work (you just cannot claim the salary costs once you give notice). The notice period can be worked, or paid in lieu if the contract of employment allows – but cannot be claimed for under the Scheme in any form; even if annual leave is being taken during the notice period.
As I’ve mentioned, consultation will not necessarily result in redundancy and it may be that you agree changes to working hours, roles/duties or changes to pay. As furlough pay is based on pay from set points in time, even if you make changes that take effect for when you open again, your employees’ pay whilst they are furloughed will be unaffected.
I hope that helps, and I wish you all the very best for when you resume business. If you need some further guidance on making redundancies, check out our free resources for a redundancy guide along with this blog on contract changes. If we can support any further, do get in touch.
