One third of businesses plan redundancies before Christmas

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One in three firms are likely to make redundancies over the next three months, but many admit they are unaware of the rules surrounding the consultation process.

This is according to an Acas-commissioned YouGov survey of more than 2,000 business leaders, which was conducted before the government revealed that its Job Support Scheme would be replacing the furlough scheme from November.

Thirty-seven per cent say they are likely to make redundancies before Christmas, rising to 60% among large businesses.

Twenty-seven per cent plan to inform the affected employees remotely, via a video or phone call; 33% will do so in a face-to-face meeting; and 33% will have those conversations using a mixture of both face-to-face and virtual meetings.

However, despite the wave of redundancies planned, 24% of business leaders admit they are unaware of the rules around consulting staff before making redundancies. This increases to 33% in firms with fewer than 50 employees.

The minimum consultation period varies depending on the number of employees at risk of redundancy. For 20-99 redundancies, consultation must start at least 30 days before the first dismissal can take effect, while for 100 or more redundancies it has to start at least 45 days before.

Acas chief executive Susan Clews said: “Businesses are facing extremely difficult circumstances due to the coronavirus crisis and our poll reveals that many are considering redundancies. Acas advice for bosses is to exhaust all possible alternatives to redundancies first but if employers feel they have no choice then they must follow the law in this area.

“Our survey reveals that a third of small businesses do not know about their legal responsibilities on consulting staff when considering redundancies. It is important for them to act responsibly and follow our advice or they could be subject to a costly legal process.”

Last week, chancellor Rishi Sunak revealed the details of the government’s new Job Support Scheme, in which the government would pay up to 22% of the wages of workers on reduced hours, with the employer paying 55%. To qualify, employers must offer staff at least a third of their normal hours.

However, the scheme has faced widespread criticism and many commentators and business groups have said it does not go far enough to curb widespread job losses over the winter, especially for businesses that have experienced cash flow problems since March.

Adam Marshall, director general of the British Chambers of Commerce, said: “With almost 40% of our firms saying they have three months cash in reserve or less, this will lessen the immediate pressure and provide reassurance for many affected firms at a challenging time.

“The chancellor must remain open to taking additional action to support parts of the economy facing unprecedented challenges over the months ahead.”

Torsten Bell, chief executive of the Resolution Foundation, said the “design flaws” in the scheme meant it would be unlikely to “significantly reduce the rise in unemployment”.