What are employees’ rights if they are made redundant at the end of the furlough period?

The furlough period or Coronavirus Job Retention Scheme comes to an end on 31st October 2020 and is being replaced by the Job Support Scheme. Although this may continue to protect some jobs, unfortunately it will mean that some employers are no longer able to retain some staff as their roles have ceased or diminished.

All employees who are dismissed due to redundancy are entitled to their notice period or a payment in lieu of notice, any outstanding wages and any untaken holiday which has been accrued.

The right to notice should be set out in the employees’ contract but as a minimum the statutory notice periods are:

· at least one week’s notice if employed between one month and 2 years.

· one week’s notice for each year if employed between 2 and 12 years.

· 12 weeks’ notice if employed for 12 years or more.

Some employers will make a payment in lieu of notice rather than ask the employee to work their notice period. A payment in lieu of notice is a lump sum payment made by an employer to an employee instead of requiring the employee to work their contractual or statutory notice period. The employer should deduct income tax and national insurance contributions before payment is made to the employee.

The Government have changed the law so that furloughed employees must receive their statutory redundancy pay and payment in lieu of statutory notice based on their normal wages, rather than a reduced furlough rate. 

Workers who have been placed on furlough continue to accrue statutory holiday entitlements, and any additional holiday provided for under their employment contract. If an employee is made redundant then an employer may ask the employee to take some or all of their annual leave during their notice period, but they must pay the employee a sum equivalent to their untaken holidays at the date of their dismissal.

In addition to notice pay and holidays, employees who have been employed continuously for 2 years or more will be entitled to statutory redundancy pay at the following rate:

  • half a week’s pay for each full year they were under 22
  • one week’s pay for each full year they were 22 or older, but under 41
  • one and half week’s pay for each full year they were 41 or older

The weeks pay is capped at £538 and the length of service is capped at 20 years. The employee’s weekly pay is the average they earned per week over the 12 weeks before the day they are given their redundancy notice. However, if they were paid less than usual because they were ‘on furlough’, their redundancy pay is based on what they would have earned normally.

If you have any questions about any of the issues in this article, please call PCB Solicitors LLP’s Shrewsbury office on 01743 248148 and ask for Ryan Bickham or you can email ryan.bickham@pcblaw.co.uk.

PCB Solicitors LLP is a modern partnership with over 100 years of experience, with offices in Shrewsbury, Church Stretton, Knighton, Ludlow, Telford, and Clun (by appointment only). The firm is forward-looking and offers a range of legal advice for businesses, including commercial property, HR and employment law, debt recovery and dispute resolution.