Redundancies: What are the alternatives for mobility companies?
For many businesses in the mobility sector, the coming months may see retailers and suppliers alike forced to consider the difficult process of making roles redundant.
It comes as the government’s furlough scheme draws to a close in October and its new ‘Jobs Support Scheme’ comes into effect, supporting ‘viable’ jobs with smaller public-funded contributions to keep employees in work.
With many independent mobility retailers in the sector not having a dedicated HR professional to help to navigate this tricky and upsetting process, Acas (the Advisory, Conciliation and Arbitration Service) has issued helpful advice revealing potential alternatives that may help avoid unfortunate staff redundancies.
Redundancies forecasted on the horizon
Various prominent organisations and trade bodies have forecasted the impending wave of redundancies expected as the furlough scheme ends, making for grim reading.
Official figures released by the Office for National Statistics (ONS) in August revealed that employment fell by the largest amount since the height of the financial crisis between April and June 2020.
Fuelled by a record crash in self-employed workers, employment from April to June decreased by 220,000 compared to the previous quarter.
Of course, this was unsurprising given that the country was in lockdown for the majority of those months. What is notable, however, is who was affected the most.
According to analysis of the data, those aged 65 years and over were the hardest hit, with a record 161,000 fewer older workers in employment.
Importantly, whilst employment was weakening, the ONS data revealed that unemployment was largely unchanged as people were out of work but not currently looking for work thanks to the government’s Coronavirus Job Retention Scheme.
According to the ONS, there were approximately 7.5 million furloughed workers in June with three million having been on the scheme for three months and over.
As the government’s furlough scheme begins to wind down over August, September and October, however, analysts have warned that redundancies are set to rise sharply.
Reviewing the results of the CIPD’s latest Labour Market Outlook report for the second quarter, the findings reported a 50 per cent increase in the number of organisations expecting to cut jobs compared to the spring report, rising from 22 per cent three months ago to 33 per cent for the three months to the end of September.
In addition, twice as many private-sector employers (38 per cent) expect to make redundancies compared to the public sector (16 per cent).
Gerwyn Davies, Senior Labour Market Adviser at the CIPD, commented: “This is the weakest set of data we’ve seen for several years. Until now, redundancies have been low – no doubt due to the Job Retention Scheme – but we expect to see more redundancies come through this autumn, especially in the private sector once the scheme closes.”
A tough time ahead for the mobility sector?
Reviewing our own recent ‘state of play’ survey, more than one in four respondents (27.5 per cent) also confirmed that redundancies are set to take place between August and October in their businesses.
Worryingly, the mobility sector – and retailers particularly – may be in for a tough winter ahead, as the furlough scheme comes to a close and the sector enters its traditionally quieter trading period.
With lockdown effectively stopping trade in the sector’s busy spring and summer months, some mobility retailers that rely on sales of big-ticket items to weather the slower colder season may experience difficult months ahead.
As retailers and suppliers head into winter with less capital than usual, many companies will be in a weaker financial position to absorb the financial costs of bringing staff back from furlough.
This may spell trouble for those individuals who are currently on the government’s job retention scheme.
“…employers need to remember that the people they are making redundant today may be ‘the same people they want to re-employ in 6 months’ time’.” Susan Clews
According to the results of the recent ‘state of play’ survey, 57.5 per cent of business leaders reported having staff furloughed to some degree, with one in four (25 per cent) of businesses still having staff permanently furloughed.
For these employees in particular, the risk of redundancy remains high if the mobility market sees a more significant fall than usual during the upcoming and unpredictable winter.
Anxiety over employment
Fears of a weak economic recovery and the furlough scheme tapering off have left many employers and their staff across numerous sectors concerned about their future livelihoods.
According to Acas, it has experienced a 169 per cent increase in redundancy related calls to its helpline over June and July this year compared to the same period last year, jumping from 12,313 calls in 2019 to a staggering 33,169 calls in 2020.
“At the moment nearly a third of calls to our helpline are redundancy related,” explains Susan Clews, Chief Executive of Acas.
“Some businesses have found innovative ways to deal with the crisis through restructuring that has allowed them to safeguard jobs in consultation with trade unions.
“Our advice in this area recommends alternatives to redundancies, which should always be used be a last resort, as well as how to follow the law if it cannot be avoided.”
A different way
Before taking actions to make staff redundant, Acas’ key advice is for employers to properly consult with their staff to seek their views on ideas that can help mitigate the financial difficulties that the business may be facing due to coronavirus.
The organisation has outlined a number of different options which employers should consider before opting for redundancies.
Offer voluntary redundancy or early retirement
Before going down the road of compulsory redundancies, Acas highlights that employers can offer employees the option to voluntarily be made redundant or take early retirement.
Importantly, the offer needs to cover the entire workforce and the option to volunteer must always be the employee’s choice, with Acas advising employers to ensure no-one is pressured or singled out to avoid claims of discrimination.
Also, the independent public body for employment rights explains that simply because an employee volunteers, does not mean that an employer has to select that individual.
“It’s a good idea to make clear to employees early on that voluntary redundancy or early retirement is not automatically given,” advises Acas.
“You must have a fair way of selecting employees who do get voluntary redundancy or early retirement.”
Did you know?
Employers can incentivise employees to volunteer, such as by offering extra redundancy pay.
Explore and agree flexible ways of working
To avoid redundancies, companies can also agree with employees to update employment contracts to allow more flexible working.
This could mean employees agree to work less hours, remote work from home to reduce office costs, job share under a part-time arrangement or work compressed hours.
Temporarily stopping working or reducing hours
Similarly to its advice regarding compulsory redundancies, Acas says that temporary lay-offs (sending employees home temporarily) and short-time working (reducing employees’ working hours) should be used as last resorts by employers trying to ward off redundancies.
Business leaders should enquire if staff can take holiday, work from home, work more flexibly or take unpaid leave before implementing either lay-offs or short-time working
Also, these should be used as temporary solutions and not as a permanent change to agreed working hours.
Importantly, mobility employers can only legally lay off employees or put them on short-time working if it is included in the employee’s employment contract or if it is a custom and practice in the workplace with clear evidence to back that claim up.
If it is not included in staffs’ contracts, employers can ask to update an employee’s contract to include these options but staff have the choice not to accept.
“Until now, redundancies have been low – no doubt due to the Job Retention Scheme – but we expect to see more redundancies come through this autumn…” Gerwyn Davies
Acas points out that if employees do agree to the changes which will become a permanent change to their contract, employers must confirm in writing what’s been agreed within 1 month of the change.
Also, unless agreed otherwise in their contract that an individual will receive reduced or no pay, employees on lay-off or short-time working should still be entitled to full pay.
Did you know?
Employees who are laid off or put on short-time working are entitled to be paid for days they do no work at all. This is called ‘statutory guarantee pay’ and is the legal minimum an employer must pay.
– Statutory guarantee pay is £30 a day for 5 days in any three-month period and the maximum an employee is entitled to is £150
– Employees who earn less than £30 a day will get their usual daily rate
– If employees work part-time, their entitlement is worked out in proportion to their part-time hours
Move employees into other jobs
Less of an option for many of the smaller mobility retailers and suppliers in the industry, Acas highlights that companies should try, where possible, to move employees at risk of redundancy into other jobs within a business.
This process of providing ‘suitable alternative employment’ requires employers to identify available roles within their business and discuss with the at-risk employee to see if they agree they are suitable.
If a role is available that is suitable for an employee being made redundant but not offered, that individual could be judged to have been unfairly dismissed.
Interestingly, Acas states that “if more than one employee is interested in the same role, you must offer the role to employees on maternity leave first. For all other employees, you must follow a fair process, for example, interview for the role.”
If an employer does offer an employee another job, it needs to be:
– in writing
– made before their contract ends
– a different job to the one they’re doing – the employer will need to explain how it’s different
The individual moving to a new job should not have to apply and the new job must start within four weeks of their previous job ending.
Once in a new role, employees have the right to a four-week trial period if they accept the new position and, if more time is needed to train for the role, an employer and employee can agree to a longer trial period.
If an employee refuses the offer of a suitable alternative job – or turns it down after the trial period – then the employee must have a good reason why the job was not suitable.
According to Acas, reasons can include lower pay, health issues preventing them from doing the new role, difficulty commuting or disruption to family life.
This is especially important because if the reason given is good, the employee will be entitled to redundancy pay. If, however, it is deemed unreasonable, an employer can refuse to pay redundancy – it will be up to the company to prove that the decision was unreasonable if the employee makes a claim to an employment tribunal.
Why explore alternatives?
Aside from being a requirement to explore alternative options with employees before making carrying out redundancies, Acas’ CEO Susan Clews explains why redundancies should always be a last resort after all options have been exhausted.
“While the focus for some will be on the here and now, it’s important to take a long-term approach when planning redundancies,” she notes.
“My colleague Faye Law, a senior adviser based in London, rightly advises that employers should ask themselves: ‘what do I want this organisation to be like after this process has finished?’
“Leaders need to consider the needs of the business and future structures, but they also need to consider the welfare of their staff, those leaving and those remaining.”
This consideration of what comes after the pandemic is an important one and it will be essential in the coming weeks and months for mobility business leaders to consider what kind of business will be left after staff have been lost.
“Think about the culture you have and the one you aspire to,” stresses Susan.
“And think about the skills you have and the ones you will need in the future. Workforce planning is integral to redundancy planning.”
As the CEO highlights, how employers – particularly in a sector as niche and close-knit as mobility – treat their staff during these difficult times will have an impact later down the line when the market recovers and companies start to look to attract – or in some cases, reattract – the best and brightest talent.
As Susan points out: “Redundancies are made up of those who leave, those who tell them to leave and those who are left behind. The ongoing success of a business is based upon all groups being treated fairly and with dignity and respect.
“As Maggie [Steven, a senior adviser based in the Midlands] pointed out, employers need to remember that the people they are making redundant today may be ‘the same people they want to re-employ in 6 months’ time’.
“If possible, and this can be a difficult ask, employers should try and maintain a good relationship.”
When there is no other way
If a business has no other choice, then there are strict rules around consulting affected employees that must be adhered to, while also trying to be as empathic and considerate to staff as possible.
The redundancy process and requirements are different depending on the size of the business and the number of employees that are being made redundant.
Smaller businesses undertaking a smaller scale redundancy exercise – applying to less than 20 employees in an establishment within a rolling period of 90 days – must ensure that they follow a fair process.
What this process will look like will differ depending on the scale of each business and the roles at risk and it is important to note that there is no set statutory procedure for a small-scale redundancy. However, Acas recommends that companies of all sizes should make a redundancy plan which clearly defines each stage of the redundancy process.
The plan should include:
- staff consultation
- selection of staff for redundancy
- staff notice
- calculation of redundancy pay
- staff support and future planning
For those planning redundancies, a step-by-step guide providing details of each step of the above is available for SMEs on its website at www.acas.org.uk/manage-staff-redundancies
Please note: The advice contained in this article does not constitute any form of legal advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances and is not intended to be relied upon by you in making (or refraining from making) any specific decisions. For Acas’ full step-by-step guidance, visit www.acas.org.uk
