16 April 2020

Businesses are struggling to keep up with the government’s various updated versions of their guidance notes on the staff retention scheme, arranging staff agreements for them to be on furlough leave and eagerly anticipating the date for HMRC doors to open for financial claims to be submitted in respect of staff payments (likely to be Monday 20 April 2020).

Current government assistance regarding staff payments

The government's scheme will pay 80% of an employee's monthly pay up to a maximum of £2,500 until 31 May 2020. See the Treasury directive issued 15 April 2020 - Read here.

The government said this scheme could be extended if necessary. The public health pandemic shows little sign of abating and all aspects of life and most businesses are affected by lockdown in some shape or form.

The government is being urged to provide an update soon as to whether it will extend the scheme beyond 31 May 2020 and for how long and on what terms.

Forward planning is required by all businesses but these life events – Covid-19 and lockdown – are like nothing else businesses have ever had to plan for.

Why now? The ticking clock

Meantime an employment law clock will start to tick this week for businesses as we approach the start of a 45 day period before 31 May 2020 when the government’s current furlough scheme is scheduled to end. Any business proposing to potentially dismiss large numbers of staff on the grounds of redundancy at the end of May 2020 (if the furlough scheme is not extended) must consider whether they should now start a period of collective consultation for redundancy with staff and representatives.

Where an employer proposes to make large scale redundancies of 20 or more employees at one establishment within a period of 90 days or less (collective redundancies), it must consult on its proposal with representatives of the affected employees and also notify BEIS.

Certain minimum time periods apply depending on the scale of the redundancies proposed:

• Where 100 or more redundancies are proposed at one establishment, consultation must begin at least 45 days before the first dismissal takes effect.
• For 20 or more employees but fewer than 100 redundancies, the minimum period which must elapse is 30 days

It may be seen to be premature to start a collective consultation process now when businesses do not know what the future will hold, whether the government extend the scheme etc. However employers who are proposing dismissing large number of employees per the guidelines above and who fail to start collective consultation soon could face the risk of claims for protective awards by any employees subsequently made redundant if full collective consultation has not taken place, or in the alternative will have to continue consultation after the furlough scheme has ended and the government is no longer paying 80% of pay. A consultation process can always be extended beyond 30 or 45 days if required.

Consequence of failure to collectively consult?

Bearing in mind that the maximum sanction for breaching the obligations is a "protective award" of up to 90 days' gross actual pay for each affected employee, which can add up to a substantial amount, that is not a risk any employer will wish to take in the current financial climate.

Take expert advice

We are working with many businesses just now to assist them in furloughing staff, helping them manage staff redundancy processes and considering alternative routes and processes. Please contact any of our employment law team for specific advice about any of these issues.

Employment law

Caroline Carr, Partner: E: cac@bto.co.uk / T: 0141 225 5263
Laura Salmond, Partner: E: lis@bto.co.uk / T: 0141 225 5313
Douglas Strang, Senior Associate: E: dst@bto.co.uk / T: 0141 225 5271