With the furlough scheme ending on 30 September, waves of redundancies are forecast to take place over the coming months – meaning it’s vital the events industry starts thinking carefully about its future. However, redundancy does come with its own costs, as Andrew Taylor, partner and head of restructuring at Shakespeare Martineau explains.
As government financial support begins winding down, many employers will be beginning to feel concerned about the future impacts of Covid-19.
For some, restructuring workforces and streamlining teams may be required and, in the worst cases, making roles redundant will be one option to save money in the longer term.
Although a difficult decision for employers, it can sometimes be the most effective solution, especially when work levels are down. However, redundancy does come with its own costs.
Direct costs
The price of redundancy will vary depending on individual circumstances, with scale being a major factor.
Statutory redundancy pay is only available to employees with at least two years’ service and usually equates to between 1 to 1.5 week’s pay – depending on age – for each full year worked. The weekly cap is currently £544, with the oldest and longest-serving employees potentially standing to receive a maximum of £16,320. Remember, this is in addition to their notice pay.
Not all employers offer enhanced redundancy. However, for those that do, this will obviously increase overall costs, particularly if those made redundant have longer service. Don’t forget that enhanced redundancy entitlements can carry over from previous jobs under TUPE transfers, so employers need to profile who they are dismissing.
Considerations
Businesses also need to consider the indirect and less tangible costs that can arise, such as a dip in productivity and the possible legal ramifications.
The redundancy process can be time consuming, with managers having to hold meetings with every individual who has been placed at risk. Even those not being made redundant will likely feel the impact, which could, potentially, make them less motivated and result in poorer productivity.
With good legal counsel, businesses can ensure they are undertaking a fair redundancy process. However, this does not prevent ex-employees from bringing unfair dismissal claims. Defending these claims will impact a company’s productivity, morale and comes with substantial associated costs.
