For 2020, we have asked the employment team at Tughans to provide practical answers to unusual, sensitive or complex work-related queries. We call this feature “How do I handle it?”

The articles are aimed at HR professionals and other managers who may need to deal from time to time with the less common place disputes at work; issues that may, if handled incorrectly, lead to claims of discrimination or constructive dismissal or some other serious difficulty.

I am a HR manager in a small Company and we have several staff currently on furlough leave. I don’t believe the Company can continue to employ all our staff on a full-time basis and, therefore, we are thinking of making a number of staff redundant and then offering them work on a self-employed basis. How do I handle this?

Firstly, it is essential that Company has a valid reason for redundancy and carries out a fair and transparent selection process. You should remember that one of the grounds for a true redundancy situation is that there is a reduction in the business’ requirements for employees to continue to carry out work of a particular kind. You should be able to demonstrate that this is the case, which would allow the fair termination of employment on the grounds of redundancy.

If this is so, and the Company undertakes a fair selection process, you should also consider the possibility of suitable alternative employment, to avoid the impact of redundancy. If you are considering the possibility of work on a self-employed basis, it suggests the Company still has a requirement, or at least some requirement, for the work currently being undertaken by the employees affected. You should therefore consider if there is a true redundancy situation and whether the work that you think could be undertaken on a self-employed basis, is in fact suitable alternative employment for those employees whose roles are at risk.

If, however the available work is considerably less than that previously undertaken, and if the hours of work, the nature of work, responsibilities, and payment and benefits are substantially different to what the employees previously enjoyed, it may not constitute suitable alternative employment. It would be necessary to review the terms of employment currently in place and compare those with what may be on offer.

The Company must undertake a fair redundancy and selection process and when the employment is terminated you should ensure that that is properly documented, that the Company has undertaken the three-step dismissal process, as appropriate, and P45 issued etc. The Company will want to be able to demonstrate that any future relationship with the individual is not as employer – employee and avoid any suggestion that there may be continuity of employment if an individual enters into a consultancy arrangement with the Company, post redundancy.

The Company should document the nature of this consultancy arrangement, identifying the services to be provided; fees to be paid; who is responsible for tax, national insurance etc; and the hours expected.

Even if this working arrangement is documented in a written contract, you will be aware that if there is a dispute between the Company and the individual as to the exact nature of their relationship, a Tribunal would look at all factors, not only the written document, to determine the exact nature of that working relationship. The Company therefore should not fall back into its previous working relationship with this individual. Remember that the individual working under a written contract providing services, such as a consultancy arrangement, could be considered a worker and therefore entitled to paid holidays, protection under the Working Time Regulations etc.

Consequently, in considering a future working relationship with any of the individuals at risk, the Company should examine all elements of that new relationship, including the Company’s control over the individual providing the services; whether the Company has provided any tools, computers etc; if the Company allows the individual to be integrated (as previously) into the existing work force; the ability of the individual to refuse work when offered; and whether the Company would allow the individual to send anyone else in their place to carry out the services required under the arrangement.

The Company should not allow a proposed self-employed arrangement to mask what is in fact an employer – employee relationship but on a part-time basis. You may wish to consider if the Company wishes to offer part time or casual work to the individual instead, although the employee may still be entitled to a redundancy payment in such circumstances.

Before undertaking such a proposed arrangement, I would encourage you to examine if there is a true redundancy situation and, if so, whether the Company has suitable alternative employment. If the Company is still minded to enter into this arrangement, please ensure the termination of employment is fully documented and that the new arrangement, whilst also committed to writing, differs in practice from the previous employment, as far as your business’ needs allow.