In light of the unprecedented restrictions imposed on society in response to the public health emergency, it is likely that many businesses will regrettably have no option but to make some of their staff redundant. For businesses that are struggling to make redundancy payments during this challenging period, the Redundancy Payments Service (RPS - part of the Insolvency Service) is currently promoting its pre-existing Financial Difficulty Scheme under which businesses can receive an interest free loan to cover statutory redundancy pay so as to avoid financial pressure spiralling and causing further job losses.
The scheme, which has been in place for a number of years, has particular relevance now when businesses will be acutely squeezed during the coronavirus crisis, but may in time recover. Payments are made directly to affected employees on behalf of the struggling employer and RPS will look to recoup the loan at a later stage.
Employers must demonstrate that receiving help under the scheme will mean the business will survive and stem further job cuts. In order to be eligible, the business must not already be subject to a formal insolvency process, although employers are reminded that it is their responsibility to consider whether it remains appropriate to continue trading and to seek professional advice if you are unsure. There is government’s guidance on the scheme. For further information on this article, please contact Amy Gallimore or Holly Ransley or visit the Coronavirus / COVID-19 area on our site.