The coronavirus pandemic has, understandably caused a fair amount of panic amongst business owners as they work to understand the impact on their business. In response, the speed that many employers are making decisions to terminate employee’s employment or place employees on furlough leave is accelerating. However, this in turn is increasing the risk of employers being exposed to unfair dismissal claims.
Whilst many employers will have access to legal advice or professional HR support, many smaller employers will not, and desire to move quickly can lead to corners being cut and mistakes being made. Those that act in haste and without to save money in the short-term, may find themselves facing costly consequences further down the line. This article outlines the main risk areas employers must be aware of.
Where an employer is deciding to make only part of its workforce redundant, it is essential that a fair process is followed, as it should be in all circumstances. It is highly unlikely that an Employment Tribunal would excuse an employer for failing to follow any process because of the coronavirus pandemic. Therefore, employers must give adequate consideration to establishing pools for selection for redundancies, deciding upon fair and objective selection criteria, fairly applying that criteria, consulting with employees and considering alternative employment before making employees redundant. While employers may be able to justify undertaking these steps in a shorter timescale than they usually would, it is essential they are still taken.
Changing employee’s terms and conditions of employment without consent
This is likely to occur where employers are considering placing employees on furlough leave or reducing employee’s working hours or pay. Any attempt by an employer to unilaterally impose a reduction to an employee’s pay will give grounds to the affected employees to terminate their employment and bring claims for unfair constructive dismissal. Getting an employee’s consent is crucial.
Laying off employees without a contractual right to do so
Whilst some employers will have a ‘lay off’ clause in their standard contracts of employment that entitle them to lay off an employee without pay for an indefinite period, many employers do not have such clauses in their contracts. Where such clause isn’t present, an employer does not have a contractual right to lay off an employee without pay, and doing so will give an employee the right to terminate their employment and bring a claim for constructive unfair dismissal.
Making decisions about who should be placed on a contractual period of lay off without pay
Where employers have a contractual right to lay off employees without pay and decide only to lay off a proportion of their workforce, similar principles to the redundancy selection process are likely to apply. Employers who act with haste and without any consideration to a fair process are likely to face claims for unfair dismissal.
Deciding who and who not to place on furlough leave
Again, if only a section of the workforce is being placed on furlough leave, this is likely to create grievances among staff stemming from why some employees have been placed on furlough leave whilst others have not. To avoid claims for unfair dismissal, an employer should be in a position to objectively justify which employees have been selected for furlough leave and ideally should have engaged in some form of consultation with all affected employees. Selecting employees for furlough leave on an arbitrary basis is bound to create problems for the future.
Failing to engage in collective consultation with employee representatives
An employer must consult with employee representatives if they are proposing make 20 or more employees redundant at any one establishment. The same rules in relation to collective consultation apply if an employer wishes to vary their employees’ contracts of employment and there is significant opposition to such proposals throughout the workforce. The penalty for failing to comply with these obligations can be very significant indeed – i.e., 90 days pay (uncapped) for each affected employee. Whilst employers may have a defence to such claims if “special circumstances” existed that meant that they could not comply with the appropriate procedures, this does not absolve employers from failing to follow any procedure at all. It remains to be seen what view the Employment Tribunal will take when considering such defences. Clearly, there will be a range of different circumstances depending upon whether, for example, a business has been forced to close down suddenly, on the one hand, and where there is a gradual reduction in revenue, on the other.
It is very important that employers recognise that throughout the present crisis they will still be required to comply with the relevant legislation concerning unfair dismissal, redundancy and collective consultation. Employment law and rights have not been suspended.
The employment law team at Linder Myers Solicitors are on hand to advise and support you through this time. Whether you are an employer needing guidance or an employee who thinks their employer may have acted unlawfully, please contact firstname.lastname@example.org today for confidential, expert advice.