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Redundancy vs Furlough

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Some employers took steps to make workers redundant prior to the government’s Coronavirus Job Retention Scheme (CJRS). Others are still making redundancies irrespective of the CJRS due to the uncertainties that remain or because they cannot afford to wait for reimbursement from the scheme. The aim of the CJRS is to provide financial assistance to avoid redundancies, if possible. 

The CJRS provides that any worker who was on payroll on 28 February 2020 and has since been made redundant can be re-hired and put on the new scheme. Whether employers will do this in practice remains to be seen. However, this may be a way of avoiding recruitment costs if staffing is not required now but the business could recover quickly. It is, however, difficult to predict whether this will happen as we do not know the length of the current ‘lockdown’ and whether the CJRS will be extended beyond May 2020. 

The CJRS guidance provides that employment law still applies. The CJRS is therefore not a panacea.  

A worker who is made redundant rather than being furloughed and has qualifying service may bring an unfair dismissal claim on the basis that the employer failed to consider this as an alternative to dismissal. Employers will need to consider alternatives prior to dismissing otherwise the dismissal could be rendered unfair.  If an employee is unfairly dismissed, an Employment Tribunal can award compensation for financial loss. 

It will of course depend on the situation and the facts. However, an employer will need to demonstrate that it genuinely applied its mind to the consideration of alternatives to dismissal, including furlough. 

Where a worker does not have qualifying service, this does not mean that the employer is absolved of responsibility or liability as equality laws apply when employers are deciding who to furlough. 

If you are an employee or an employer wishing to discuss employment issues arising from the current COVID-19 crisis or generally, please contact us. 

Please note that this information is for guidance only and should not be regarded as a substitute for taking full legal advice on specific facts and circumstances. This article reflects the law at the time of publishing but this is a rapidly changing area and advice should be sought at the relevant time.