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Restructures and redundancies when furlough ends

The Government’s Coronavirus Job Retention Scheme (CJRS) is currently set to end on 30 September 2021. The scope of the CJRS has already started to decrease, with the Government’s contribution to wages – for hours not worked – reducing to 70%, from 1 July 2021, capped at £2,187.50, and then 60%, from 1 August 2021, capped at £1,875.

Many employers will be assessing whether they can retain all people currently on furlough, as the CJRS starts to reduce in scope, or whether there is a need to make redundancies or transfer people into alternative roles.

The CJRS has been widely used in the retail sector and the hospitality sector. The retail sector saw nearly 180,000 jobs lost in 2020 and the Centre for Retail Research has estimated there could be up to 200,000 jobs lost in 2021. The pandemic may well have accelerated the trend of jobs moving from front-of-house to back-of-house. As such, there will be some scope for restructuring in this sector but redundancies remain likely.

The Office of National Statistics (ONS) has estimated that hospitality sector jobs are at the highest risk of being replaced by automation. As the pandemic has increased reliance on technology, it is possible this trend will also accelerate once the CJRS ends.

This article considers the likely challenges and issues that employers should consider in this climate.

How will restructures impact roles in the post-Covid world?

Employers may decide to restructure, which may involve changing the functions of a role, merging two or more roles, or creating entirely new roles.

What happens if colleagues get matched to a role as part of a restructure?

If a person’s role is not included in the new structure, then they may well be at risk of redundancy. However, if there is a ‘match’ to a role – in the new structure – it may well be reasonable to slot that person into the new role. If more than one person is a ‘match’ to the new role, then the employer may need to ring-fence the role and undertake an interview process to decide who to appoint.

In deciding whether or not an old role is a ‘match’ for a new role, the most important factor is likely to be the range of functions that are included in the job description for both roles. However, there are other factors that may be important, including the amount of re-training required, the seniority of the role, the experience required for any new functions etc.

What if there is no job available for colleagues following a restructure?

Where an employee’s role has been removed and they are not a match to a new role, they would be at risk of redundancy. In this scenario, the employer would be obliged to look for and notify those at risk of any alternative vacancies. Whilst an individual at risk of redundancy should be given priority in respect of alternative vacancies, there is no obligation to appoint an individual where they do not have the requisite skillset to undertake the role.

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How can employers make a decision about selecting people for redundancy?

Where a role is to continue in a new structure, but less people are required to be in that role, the employer would need to consider who should be included in the ‘pool for selection’ and engage in scoring employees to decide who should be selected for redundancy. An employer has a fairly broad discretion when deciding how to frame the pool for selection. The employer could place weight on other factors, in addition to the role itself, such as location or client contacts

What discussions should employers engage in regarding the restructure?

Employers should engage in consultation with affected employees – before undertaking a restructure – regarding the changes to the structure and the impact on them as individuals. Where more than 20 roles are to be made redundant the obligation to engage in collective consultation would be triggered.

When can employers change the terms and conditions of employment contracts?

Some employers may decide to reduce hours of work or salary to remain sustainable as a business.

Employers can propose a variation to terms and conditions at any stage. If the employee agrees to the change, then they should be sent a formal letter confirming the variation to the contract of employment. However, if an employee does not agree to the proposed variation, the employer cannot unilaterally impose the change. In this scenario, the employer would need to terminate the contract of employment and offer re-engagement on the new terms and conditions.

What discussions should employers engage in before terminating contracts of employment?

Employers should engage in consultation with staff before terminating employment in connection with changes to terms and conditions. If it is necessary to dismiss more than 20 individuals, the requirement to engage in collective consultation would be triggered. Where an employee’s contract of employment has been terminated they would be able to bring a claim for unfair dismissal, but if the employer had sound business reasons for the dismissal and otherwise acted reasonably, such a claim would be unlikely to succeed.

How can Cartwright King’s Employment specialists help with post-Covid and workplace restructure queries?

Our employment team can provide advice from the start of a restructuring process right through to its conclusion. Check out further details of the extensive employment law services we provide.

For further advice or assistance, get in touch with our friendly team.

Legal Disclaimer.

All advice is correct at time of publication.