The key redundancy considerations for employers after the furlough scheme ends

If you are planning on the difficult decision of making a furloughed employee redundant after the scheme ends on 31 October 2020, there are several key considerations you need to consider.

Notice period pay

During an employee’s notice period, they are entitled to their full salary regardless of what they received while on the furlough scheme. Remaining annual leave must also be paid, at the full rate of pay. This will be based on the amount of accrued holiday that has not been taken at the termination date.

The consultation process

Due to the Government’s advice, consultation processes may need to be done remotely. Therefore, planning is essential to ensure the accommodation of furloughed employees.

Moreover, redundancy processes must be carried out with compassion, dignity, respect and kindness now more than ever. Income loss and concerns surrounding finding new employment have increased, so it is important to ensure the employee understands the grounds for their redundancy and that all alternatives to redundancy have been considered.

The selection criteria and process 

Employers and organisations will need to consider their current redundancy selection criteria and also to ensure the process is fair.

Statutory pay

The Government states that an employee’s redundancy rights do not change by being on the furlough scheme. Any furloughed employees will, therefore, be entitled to a statutory redundancy payment if they have been employed continuously for two years, along with any contractual redundancy entitlement.

On 31 July, the legislation came into force that requires statutory redundancy payments for furloughed employees based on their initial salary.

The statutory redundancy pay, based on age and years of service, are as follows:

  • Under 22 – half a week’s wage for each full year 
  • Between 22 to 41 – one week’s wage for each full year
  • Older than 41 – one and a half week’s wage for each full year

There is a cap for the length of service (20 years), and the weekly pay is capped currently at £538 per week.

The maximum statutory redundancy pay for those made redundant on or after 6 April 2020 is £16,140. Employers can pay above the statutory entitlement if they wish to do so but this would usually be via a Settlement Agreement.

Unfair dismissals

If an employer does not follow the correct procedure or is unable to demonstrate that there is a genuine reason for the redundancy, there could be a potential claim for unfair dismissal. It is, therefore, important to ensure you follow the correct process and have considered all the alternatives and the reasons for redundancy before making any decisions.

For help and advice on matters relating to redundancy, contact our expert team at Mackrell.Solicitors today.

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Joanna Alexiou

Joanna Alexiou

Associate Solicitor at Mackrell.Solicitors
Joanna joined the firm’s Employment Law team in February 2020 having previously worked at another prominent firm of solicitors in the heart of London. Joanna has worked with clients from the finance, technology, arts and culture, marketing, charity and food and drink sectors.