Two in five business leaders are worried about making redundancies over the next 12 months, as the smallest mistake could see them facing employment tribunals and hefty legal penalties.
In a survey of 2,000 UK business leaders, by employment law advice firm BrightHR, 43% admitted they are “not confident” in making redundancies in line with the law.
With a third of companies expected to cut jobs in the next quarter of 2020, according to the latest Labour Market Outlook, this is a “big concern,” the firm said.
The study also found over half (51%) of employers are “not clear” on the redundancy process during or after furlough, with lots of confusion surrounding whether redundancy pay is based on employees’ normal wages or their furlough rate of pay.
While redundancies will be an “unfortunate necessity” for many companies over the next year as a result of the COVID-19 pandemic, firms should explore every other option first, BrightHR advised.
“If the worst happens and an employee takes you to a tribunal, a judge will expect to see a firm business case for why you had no choice but to make a role redundant,” explained CEO and employment law expert Alan Price.
“The tribunal will also want to see that you’ve followed the correct redundancy process — and failure to do so could lead to you making a big pay out to your former employee.
“None of this is easy. Contract changes and redundancies are among the most complicated areas of employment law.
He added: “It's essential that employers either understand the redundancy process or they have the relevant tools and people to assist them with making the right decisions in line with the law.”