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Redundancies, restructuring and insolvency

The government’s furlough scheme offered some immediate help to organisations during the Covid-19 pandemic.

However, with this due to come to an end on 30 September 2021, and long term structural change now seemingly inevitable for employers in nearly all sectors in any event, businesses are already grappling with how to manage the longer term economic impacts of Covid-19.

Most employers will have already taken steps to reduce operating costs. Recruitment freezes may already be in place, discretionary benefits and bonuses might have been cut back, pay may have been reduced or frozen, contingent staff may have been let go, and fixed-term contracts might not have been extended. For employers using the furlough scheme, reabsorbing all payroll costs when it comes to an end will be particularly challenging. Employers need to consider how to manage costs moving forward: redundancies, restructuring and other cost control measures such as (further) 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.

Employers need to be mindful of the usual redundancy requirements such as collective consultation obligations, fair selection criteria and avoiding discrimination, and they will also need to adapt to the challenges of holding online consultation meetings while many workers are furloughed, self-isolating or working remotely (see our FAQs on post-Covid restructuring). 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.

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.

Further reading

COVID-19

Restructuring the workplace post Covid-19 - FAQs for employers

11 October 2021

As the furlough scheme has now ended, some employers are focused on cost-saving measures in the face of ongoing economic challenges.

Contract breaking up is never easy

Redundancy

14 April 2021

This Inbrief looks at how employers can minimise the risk of legal claims when dismissing employees by reason of redundancy.

Employment

I’m still standing - should employers set up a standing body for collective consultation?

10 March 2021

Employers may have to contemplate difficult decisions as they look ahead to the lasting effects of the pandemic, including potentially making redundancies. This article discusses whether now might be an opportune time for employers with no recognised trade union to set up a standing body for collective consultation purposes.

Contract breaking up is never easy

Collective redundancy consultation – do you need to look back before moving forward?

02 December 2020

A recent European Court of Justice ruling suggests that employers should look at a “rolling” 90-day period when ascertaining whether collective redundancy consultation is required. While this has potentially significant implications, the end of the Brexit transition period may limit its fallout.

Employment

Information and consultation

10 July 2020

Employers with at least 50 employees can be required to establish arrangements for informing and consulting their employees on business developments. These arrangements are commonly called ‘works councils’.

Employment

Insolvency and TUPE

21 May 2020

This Inbrief aims to guide you through the law on transfers of undertakings (TUPE) in the context of an insolvency, summarising the main employment considerations.

Employment

Collective redundancies

05 May 2020

Most employers are aware of the procedures that have to be followed when making someone redundant (or their job, to be more precise).

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