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Redundancy whilst furloughed

Sarah

| 0 Posts

15 Apr, 2020 14:57

I work for a medium sized company in manufacturing and unfortunately, our products are not considered essential. We had to shut the factory from the first day of the lockdown and furloughed factory staff from that day whilst office staff worked from home until the end of March and furloughed from 1st April. Out of almost 350 employees, only 16 are non furloughed. The factory shut was initially for 3 weeks ending after the Easter Monday bank holiday. However, we have had to extend this. It has now come to a point where unpleasant decisions will have to be considered ie redundancies.

My research so far is telling me that employees can be made redundant whilst on furlough. I wondered if anyone has any thoughts on this, especially the legality and ethical aspects.

Any feedback would be very much appreciated

Many thanks

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  • Keith

    | 0 Posts

    15 Apr, 2020 15:22

    Yes they can but why would you? why not leave them on furlough - its what the scheme is there for to prevent redundancies during this period?

    What would you be trying to achieve by making them redundant now?
  • Elizabeth Divver

    | 0 Posts

    15 Apr, 2020 15:38

    It would be better for your cash flow to leave them on furlough and claim back their furlough pay, provided your business can make it through to May when the grants should start being paid - unless you are topping up to 100%. If you are topping up, I would go back to the workforce and ask them to agree to their pay dropping to 80% or £2,500 per month in order to save jobs.
  • Sarah

    | 0 Posts

    15 Apr, 2020 16:07

    In reply to Elizabeth Divver:

    Hi Elizabeth, thank you so much for your prompt feedback...very much appreciated.
    We have 2 pay categories (weeklies & salaried staff). Weeklies - whose hourly rate is very close to the NLW - are being topped up to 100%. Salaried staff have been asked to take a 10% reduction which all have agreed to. I believe the reason behind the contemplation is cash flow. Our customers are in the same boat i.e. they sell non essential goods. So if they are not buying because they can't sell we basically can't sell either :(
  • Sarah

    | 0 Posts

    15 Apr, 2020 16:11

    In reply to Keith:

    Hi Keith
    Thanks for your feedback...really appreciated.
    At this stage, it is just an action point to be considered if the situation becomes dire. The thought is very much cash flow driven and I suppose dependent on how quickly the funds from the scheme will be available
  • Elizabeth Divver

    | 0 Posts

    15 Apr, 2020 16:11

    In reply to Sarah:

    If the staff, weeklies and salaried, know that the alternative is people losing their jobs, they may well agree to dropping to the lower of 80% or £2,500 per month.
  • Keith

    | 0 Posts

    15 Apr, 2020 17:13

    In reply to Sarah:

    Of course there is no obligation legally to top up salaries to 100% even if this means they are paid below the NMW

    The cash flow implications of paying redundancy pay and notice pay in one go would probably be significant I would assume
  • Peter Stanway

    | 0 Posts

    15 Apr, 2020 17:30

    In reply to Keith:

    There is some debate over whether an employer could pay notice pay from furlough (as long as topping up to 100%)
    We have a few clients who have gone early with redundancies because they know they will be quiet for months after lockdown and will have other priorities at that time.
    As Sarah said difficult legal and moral issues to be addressed
  • Sarah

    | 0 Posts

    16 Apr, 2020 11:48

    In reply to Elizabeth Divver:

    salaried staff already know that there will be a further reduction (20%) in May which has been accepted and I share your sentiments that a pay cut would be better than no pay at all. I am just mindful that as much as unprecedented times tend to bring out the best in people, the opposite can creep in sometimes :(. Fingers crossed it goes down well with the weeklies. Thanks again for your feedback
  • Sarah

    | 0 Posts

    16 Apr, 2020 11:53

    In reply to Peter Stanway:

    I am fairly new to the company (well, I say new...just over 3 and a half years) and have worked really had to change the culture that was and improve staff morale. So, on a rather selfish note, I am also worried about taking 3 and half years worth of steps back :(
  • Keith

    | 0 Posts

    16 Apr, 2020 11:55

    In reply to Peter Stanway:

    Peter Stanway said:
    There is some debate over whether an employer could pay notice pay from furlough (as long as topping up to 100%)

    Indeed I struggle with this but do wonder if the scheme is sophisticated enough to stop this

  • Peter Stanway

    | 0 Posts

    16 Apr, 2020 14:01

    In reply to Sarah:

    Iu nderstand
    I tried to put my big axe in the loft 20 years ago
    Life is rarely that simple.
  • Sarah

    | 0 Posts

    30 Apr, 2020 12:30

    In reply to Peter Stanway:

    Hi, this thread is useful. I understand the argument that there would not be a strong case for redundancy if you are using the furlough scheme - but if it was decided necessary and was justfied, do you think you would have to repay the previous furlough money to HMRC? My guess is not...

    Thank you!
  • Peter Stanway

    | 0 Posts

    30 Apr, 2020 14:03

    In reply to Sarah:

    It is possible but my view is that as long as the Accountants don't just see it as cheap/subsidised notice periods and are prepared to have to refund it, then at least you have got ahead of the curve
  • Sarah

    | 0 Posts

    30 Apr, 2020 14:33

    In reply to Peter Stanway:

    OK thanks Peter, much as I thought :)