Redundancy Whilst on Furlough

consultation

Have you recently been made redundant whilst on the government furlough scheme and don’t know what to do next? Over this post, we will share with you your rights to what redundancy pay you are entitled to if your company recently became insolvent and you were made redundant.

Firstly, let’s find out if you are eligible.

The Government Insolvency Service will help get you paid redundancy pay if you were furloughed and then made redundant because the company became insolvent.  The service will only help you if you were dismissed and not re-employed under the furlough scheme. 

You’ve figured out you are eligible, so what’s next?

Being made redundant comes with many rights, which you will be entitled to. These include being made redundancy pay, being paid your notice period, plus being paid any money that your employer owes you (unpaid wages). If you were on furlough when you were made redundant, you still have the same rights as if you were made redundant without being put on furlough. Find out how to apply for your redundancy pay via the Government website.

Here’s what you can apply for:

  1. Redundancy pay: You can apply for redundancy pay if you have worked for the employer for 2 years or more. This included the time you were on furlough. For example, if you worked for a company for 1 year and 7 months, and then were on furlough for 5 months, you would have been employed for 2 years and would be eligible for redundancy.
  • Holiday pay: You are entitled to your holiday pay when you have been made redundant. You can apply for days you accrued but not used in your current annual leave year. You can continue to accrue holiday entitlement during furlough, but your employer can also ask you to take holiday, whilst furloughed. If you’ve been made redundant part way through your annual leave, then you will only be entitled to some of your holiday pay.

Days off where you received furlough pay for do not count against your annual leave entitlement. You can claim these as holiday pay. Holiday pay must be paid at your full salary and not furlough salary.

  • Money you’re owed: You may be entitled to other payments such as overtime and commission. If you were paid 80% of your monthly wage, up to £2,500 a month on the CJRS scheme, then the government can not pay you the difference between this furlough pay and your full salary.
  • Notice pay: If you were not given notice prior to being made redundant, you can also apply for your notice to be paid, as long as you have worked for your employer for at least one month.

So, what will be your rate of pay?

When you apply for your redundancy pay through the government, you will be asked about your rate of pay. This will be based on your weekly pay and this is what they will use to calculate your payments. You will need to provide your pre-furlough pay, rather than what you earned on furlough. If you were not paid weekly, you can find out how the government calculates your pay here.

Under new laws introduced at the end of July 2020, furloughed employees being made redundant will receive redundancy pay on their normal wage, rather than the furloughed rate. This has been put in place to protect workers and ensure you are being paid your full entitlement. These changes will also apply to Statutory Notice Pay, which is where you are being paid your full amount for your notice period rather than the furloughed rate. 

Although the government will help get you paid your statutory redundancy, there are limits to how much they can pay. You can find out more on our Calculate Your Redundancy Pay post.     

If your company fails to pay redundancy pay, or if you disagree on the amount you have 3 months from the date your employment ended to make a claim to an employment tribunal. Also, if you were not consulted prior to being made redundant, you may be entitled to a compensation payment called a protective award. To get this, you will have to make a claim to an employment tribunal, which you can do online on the government website.

You can read more about calculating your pay on our previous post.

Redundancy Consultation

Whether you are furloughed or not, the usual consultation period where your employer consults staff individually and collectively about the redundancy proposals, allows them to comment and shares the rules for a fair consultation, will still need to be put in place. 

As you will be on furlough, the logistical issues of having a consultation on site will need to be addressed, meaning consultation will need to be done remotely, via video call, conference call or in writing. Employees will still be given the right to be accompanied by a representative (if this is your normal company practice) to redundancy meetings even if the meeting is carried out remotely. 

The coronavirus job retention scheme confirms that ‘whilst on furlough, employees who are union or non-union representatives may undertake duties for the purpose of individual or collective representation of employees or other workers.’

If the employer is making 20 or more redundancies in a 90 day period, then a collective consultation will be triggered and the employer will need to ensure they consult collectively with the appropriate Trade Union or existing staff representatives. 

Your employer should also bear in mind that the furlough scheme is coming to an end on the 31 October 2020, so consideration should be given to how this may impact the timeframe for any consultation period.

Redundancy selection process

For furloughed staff, the guidance is that usual employment law and employee rights will still apply, including protection from unfair dismissal. Employers will need to ensure that the selection criteria is fair, objective and reasonable; and that staff are consulted about them before they are finalised. Automatically selecting employees for redundancy based on being furloughed can be problematic for the company and may result in unfair or discriminatory dismissal.