Redundancy or Lay-Off Due to Coronavirus COVID-19

This article considers the risk and options for employees who are facing possible redundancy or temporary lay off, due to the impact that Coronavirus has or will have on their Employer’s business.

Right now, as of 17th March 2020 and writing this article, I suspect there will be very few decisions to make redundancies. However, if the pandemic lasts for a month or more, then I envisage that more businesses will need to make lay-offs whether temporarily or permanently.

In order to consider the position, we need to know the legal definition of redundancy.

What is Redundancy

The circumstances which meet the statutory definition of redundancy are set out in section 139(1) of Employment Rights Act 1996. To summarise, the statutory definition of redundancy identifies three sets of circumstances:

* Business closure (closure of the business altogether).

* Workplace closure (closure of one of several sites, or relocation to a new site).

* Diminished requirements of the business for employees to do work of a particular kind.

As you can see, it is likely that any of these three might apply if the impact of Coronavirus is very bad. But certainly, the final strand, diminished requirements, might kick in.

The diminished requirements aspect of redundancy simply means that there is a lack of work for you to do your kind of job. So if you work in a factory and there are no orders, then that could amount to a redundancy situation. If you are in the hospitality trade (pubs, bars, theatres etc) then given the Government’s position that the public should not visit such places (correct as at 17/03/2020) then there is likely to follow there will be a lack of customers and a lack of work for you to do.

Temporary Lay-Offs

Your employer can ask you to stay at home or take unpaid leave if there’s not enough work for you. If you are being asked to work from home, then, of course, you should be paid!

A lay-off is if you’re off work for at least 1 working day. Short-time working is when your hours are cut.

There’s no limit for how long you can be laid off or put on short-time. You could apply for redundancy and claim redundancy pay if it’s been:

  • 4 weeks in a row
  • 6 weeks in a 13-week period

You might be eligible for guarantee pay but it is not much at all – £29 a day.

Will I be Made Redundant because of Coronavirus?

Before a company can make employees redundant, even if there is a diminished requirement of work, then they must still follow a redundancy process.

A process includes:

  • a consultation with you and the wider affected employees
  • various meetings with you
  • consideration of alternative roles

All these are aimed at trying to reduce the need to make redundancy.

Am I entitled to Redundancy Pay?

I have made a great redundancy calculator which can help you work out what redundancy pay you should get. The calculator also adds some on for settlement of claims, but in a genuine redundancy situation, there is no need for a business to pay that.

In short, you are entitled to redundancy pay if you have worked at the company for over 2 years. You then get a weeks pay for every year worked, capped at a maximum weekly pay. If you are over 41 there is a multiplier of 1.5x the amount. Or just use my redundancy calculator!

In addition to redundancy pay, you should also receive:

  • payment in lieu of your contractual notice period – eg 1 month, 3 months notice.
  • payment for untaken but accrued holiday pay
  • payment for any benefits during notice period such as car, pension etc (although this depends on your contract of employment)

What happens if I am made redundant because of COVID-19?

Usually, once you have followed the redundancy process and you have been informed of redundancy, it is likely that is it – you will be unemployed, sadly, and you’ll have to start looking for another job.

Occasionally, employers making redundancies give employees a Settlement Agreement which is a legally binding document that terminates your employment and in return, you agree not to sue the company for any employment claims. If you are given a Settlement Agreement then you need advice from a solicitor before signing it. I’m a settlement agreement solicitor so give me a call for a free no-obligation chat about your situation.

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Steven Mather Solicitor

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Call: 0116 3667 900
Email: steven@stevenmather.co.uk