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Redundancy & restructuring

The government’s job retention scheme offered some immediate help to organisations during the Covid-19 pandemic. However with this due to come to an end on 30 April 2021, businesses are already starting to look at how to manage the longer term economic impacts of Covid-19.

Most employers will have already taken steps to reduce operating costs. In terms of staff costs, recruitment freezes may already be in place, discretionary benefits (e.g. bonuses) might have been cut back, contingent staff may have been let go, and fixed-term contracts might not have been extended. This makes the prospect of reabsorbing all payroll costs at the end of the furlough scheme even more challenging. As the scheme comes to an end, employers need to consider how to manage these costs moving forward: redundancies, restructuring and other cost control measures such as pay cuts will be unavoidable for many.

No employer wants to make redundancies, and most will try to resist for as long as possible. Businesses will go out of their way to protect their workforce, keep up morale and maintain goodwill. Employers should therefore think creatively and look at other alternatives that may better suit the needs of their business. Our Inbrief summarises some of the options and examines how to avoid falling foul of the legal procedures and obligations that might come into play. The UK has, however, introduced a new Tier 4 level of restrictions, and despite the roll-out of the first vaccine the details of an exit plan are far from clear. The crisis is likely to be with us well into next year.

This article discusses how you may plan an exit strategy from furloughing and other measures taken to date - including reducing headcount by implementing redundancies and forcing through adverse changes to terms and conditions. The legal penalties for getting it wrong are significant: protective awards of up to 90 days’ full pay, unfair dismissal claims, and claims for uncapped damages for discrimination. We also have further content below on this topic.

In conjunction with our international colleagues, we have produced a useful guide on restructuring for international employers and have further information on our international page.

We have an experienced team available to provide comprehensive legal and HR support in the UK, Ireland and Hong Kong, as well as internationally through our alliance with Ius Laboris. In addition to our team of specialist employment lawyers, we can leverage our team of HR consultants to support meetings and assist trade union and worker representative body negotiations. To find out how we can support you with redundancy and restructuring matters, please visit our service page.

Please do get in touch if you would like any support on managing the impact of Covid-19 on your workforce.

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