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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 in April 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.

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).

 

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