Can I make my employees redundant over the COVID-19 Level 4 lockdown period?
With many businesses forcibly closed over this time, employers may be thinking of whether they can reduce staff to stay afloat.
However, redundancy is not necessarily the best solution as employers have to follow the correct process and show a genuine commercial need to make employees redundant. This becomes more difficult because of the government’s recently introduced wage subsidy scheme.
The wage subsidy scheme is for businesses who need help topping up employees’ wages because of the economic climate. If your business is under financial strain and your actual or forecast revenue is 30% lower than the same month last year, you can apply for the subsidy. This should ease some of the financial burden of paying wages for 12 weeks.
The scheme is designed to help businesses so they don’t have to make staff redundant. Businesses who receive the subsidy are expected to pay staff at least 80% of their normal wages (and to pay 100% if they can!) However, if a business can’t pay 80% during the Level 4 lockdown, they should at least pass on the full subsidy to their staff. Any changes to employment agreements including wages must be agreed in writing. Staff receiving the subsidy must remain employed for the full 12 week period.
To make staff redundant, you would have to show that you had a genuine commercial justification for the redundancy even with the wage subsidy from the government available. And remember, if you do make anyone redundant, you cannot claim the subsidy for that employee’s wages!
If you need any advice or assistance with any employment issues over this time, please get in touch by email. We are still working remotely.