Why firms need to be cautious about furlough's impact on redundancies

Employers must not assume that someone who has been on furlough can be made redundant before others, should the need to cut jobs arise, an employment lawyer has warned.
Charlotte Geesin says that a lot of employers are assuming that someone who has been on furlough can be cut first “but that is not the case at all” and could lead to unfair dismissal claims.Charlotte Geesin says that a lot of employers are assuming that someone who has been on furlough can be cut first “but that is not the case at all” and could lead to unfair dismissal claims.
Charlotte Geesin says that a lot of employers are assuming that someone who has been on furlough can be cut first “but that is not the case at all” and could lead to unfair dismissal claims.

Charlotte Geesin, head of employment law and business immigration at Howarths, told The Yorkshire Post that a lot of employers are assuming that someone who has been on furlough can be cut first “but that is not the case at all” and could lead to unfair dismissal claims.

She added: “They must act very cautiously when seeking to make redundancies of people who have been on furlough because the employer has no automatic right to treat them any differently.

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“They have to treat them in the same way as people who are still working for them.”

Ms Geesin is concerned that too many businesses are assuming that Government support will continue beyond the end of April, when the furlough scheme is due to end.

The president of the business organisation CBI has called for the Government to continue the scheme into the summer.

Despite this the head of employment law at Cleckheaton-based Howarths says a lot of businesses are in denial and should be making preparations for redundancies to avoid unfair dismissal claims.

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She said: “Most employers are aware that whenever they dismiss somebody there’s a risk.

“However, I think that they have a million and one other things to be worrying about at the moment.

“That risk has been pushed to the back of their minds – particularly while the furlough scheme and other support schemes are still in existence.”

The average payout for unfair dismissal claims brought between April 2019 to March 2020 was almost £7,000, says Ms Geesin.

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However, that figure is likely to rise, according to the employment lawyer, as the labour market will have “drastically reduced”.

The lawyer believes it could end up costing businesses thousands of pounds in payouts if they fail to consult employees properly before making redundancies.

“In order to effectuate a fair dismissal, an employer has to do two things,” Ms Geesin said. “Firstly they have to establish a potentially fair reason for that dismissal and secondly they have to effectuate a fair process.”

She added: “When it comes to the pandemic and removal of Government support schemes, the potentially fair reason is probably going to be redundancy.

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“We’ve seen lots of businesses limp through the last 12 months, because the Government support schemes have been in place – they can afford to keep their staff on the books. However, once that support scheme is removed businesses are going to have to face up to the reality of things. They are going to have to perhaps reduce headcounts. Some of them might be forced to close.”

Work reduction will be key

In the event of redundancy, firms will be required to identify a reduction in work and also employees who will be affected.

Charlotte Geesin said: “Once you have identified those employees, which isn’t always that easy, particularly given that people haven’t been at work for 12 months, you then have to embark upon consultation with them.”

She thinks that the waters may have been muddied as a result of furlough as staff have been away from work for months and firms might have to cast their minds back to before the pandemic to identify reduction in work.

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