Redundancy and Furloughed Staff

If you find yourself in the position of implementing a redundancy programme during or after the furlough period, the usual  procedure of demonstrating there is a genuine redundancy situation and you must follow a fair process, there are additional considerations for employers in this regard which include:

  • The logistical difficulties (consulting employees remotely): Redundancy consultations must take place individually or collectively, but this will be by means of video or conference call, or in writing.
  • It is good practice to give employees the right to be 'accompanied' to the redundancy meetings, even if this meeting is carried out remotely.
  • If you are making 20 or more employees redundant in a 90-day period and collective consultation is triggered, the business must ensure that it consults collectively with Trade Union or staff representatives, and that it meets the 30-day (or 45-day for 100 or more redundancies) deadline for starting consultation.  There may of course be practical difficulties in undertaking full consultation with representatives in the current circumstances.
  • For businesses where there is no recognised Trade Union or existing staff representatives, an election for staff representatives will have to take place before consultation can begin, further extending the period of time needed for a full consultation process.
  • Employers have to be particularly careful to ensure that redundancy selection pools and criteria are fair, objective and reasonable and that staff are consulted about them before they are confirmed.

Warnings:

  • It is unlikely to be deemed ‘fair’ if employees are automatically selected for redundancy because they were furlough selected staff.
  • Employers will have to consider if selecting an employee for redundancy when he or she could remain on furlough leave may make the resulting redundancy dismissal unfair.

Alternatives to redundancy

As part of any fair redundancy process, business owners should consider steps that can be taken to avoid compulsory redundancies. Including:

  • seek applicants for voluntary redundancy;
  • encouraging staff to work flexibly on reduced hours by agreement;
  • freezing or restricting recruitment;
  • redeploying existing employees to other parts of the business;
  • reduction in the use of freelancers;
  • pay freeze or agreed salary reductions.

 

Does furlough affect redundancy payments?

An employee’s redundancy rights are unaffected by being furloughed!

     Redundancy Pay

Employees who has been employed by the business for a continuous period of more than two years are entitled to receive statutory redundancy payment (or a contractual redundancy payment if applicable). Statutory redundancy payments are calculated by reference to the period during which the employee has been continuously employed, his/her age and gross weekly pay.  A useful tool is the statutory redundancy calculator located on the Government website. 

Statutory redundancy payments relating to furloughed staff are calculated on the employee’s pre-furlough salary. Businesses cannot reclaim the cost of statutory or contractual redundancy payments under the furlough scheme.

     Notice Pay

Employees who are made redundant whilst on furlough leave are entitled to be given notice of termination in accordance with their contracts of employment.

Notice pay during the notice period is payable at the rate of the employee’s pre-furlough salary. Companies are likely to be able to reclaim the cost of an employee’s notice pay (up to 80% of salary and subject to the £2500 per month cap) for any notice period whilst on furlough.

Employers cannot reclaim any payment in lieu of notice under the furlough scheme.

     Accrued or unused holidays

Employees who are made redundant whilst on furlough leave are entitled to be paid in lieu of any accrued but untaken annual leave. Again, this payment is at the rate of the employee’s pre-furlough salary and again, employers will not be able to reclaim the cost of any payment made in lieu of annual leave under the furlough scheme.

 

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