As the Furlough scheme moves closer to finishing at the end of October and with employers needing to contribute increasingly to the costs of the scheme, many companies are now having to look at all options to ensure the financial viability of the business.
If a company is unable to sustain its level of staff for the near and foreseeable future but anticipates being able to bring employees back at a later date, then putting an unpaid leave option to employees as part of the redundancy consultation process may be a suitable option.
Other options companies may want to put forward to staff include a salary reduction or a reduction in hours (or a mixture of the two).
Redundancy Consultation
The correct procedure when putting these options to employees is to start the redundancy consultation process and to notify employees of these potential options for them to consider during the consultation process. (see below section – Redundancy Process) Below is a template consultation letter, detailing how an employer may communicate the alternatives to redundancy to an employee – this letter should be issued following a face to face discussion.Template Consultation letter – unpaid leave as an alternative to redundancy
Download Template If the employee wishes to take the unpaid leave or reduced hours / salary option, then it is important to confirm the changes to them in a variation of contract letter.Template Variation of contract letter – unpaid leave
Download TemplateUnpaid Leave considerations
Before offering unpaid leave as an option, it is important to note that even when on unpaid leave an employee is still entitled to annual leave accrual and also any other employment benefits (health care / company car / phone / laptop) as they are still an employee. If the employer wishes to cease any of these benefits during the unpaid leave period, then this needs to be communicated and agreed up front in the variation of contract letter. The employee will also retain their length of service on unpaid leave (no break in service).Redundancy Process
When making less than 20 employees redundant in a 90-day period the process that companies need to follow is:- Once the decision has been made that the company needs to reduce headcount and certain roles need to be cut, it is important to get the new company structure formed in writing to ensure a transparent process is communicated to employees.
- The post holders of these “erased” roles are classed as being at risk of redundancy, meaning that the role is being made redundant and they as the post holder may therefore be made redundant.
- Have a meeting with the individuals to explain that they are at risk of redundancy. This meeting starts the consultation process.
- A consultation process is the time for the employer or employee to put forward any suggestions or ideas to avoid the redundancy. There is no minimum time that it needs to last however it does need to be meaningful – usually a week is adequate for the consultation process.
- If suggestions are put forward by either party then another meeting may be required to discuss the viability of the suggestions.
- The end of consultation process meeting is the time to give the outcome of the consultation process and to confirm to the employee that they are being made redundant. At the end of this meeting the employee needs to be given the outcome in writing and this letter is also giving the employee notice and advising about their leaving details.
