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 make.

Notice period pay

During an employee’s notice period, they are usually entitled to their full salary regardless of what they received while on the scheme, although this is not always the case. Remaining annual leave must also be paid, at the full rate of pay but can sometimes be taken during the notice period. 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 new advice, working from home where applicable and limiting the movement of staff within the office, consultation processes may need to be done remotely. Therefore, planning is essential to ensure the accommodation of furloughed employees.

Moreover, redundancy must be processed with compassion, dignity, and respect as now more than ever, with mental-wellbeing at a nationwide low due to the pandemic. Income loss and concerns surrounding finding new employment have increased, so it is best to ensure the employee understands the grounds for their redundancy and that all alternatives to redundancy have been considered.

Pools, selection criteria and process 

Employers and organisations will need to consider each redundancy on its own merits. The process will be different for each circumstance

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 time spent at the company, 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, then there could be a potential claim for unfair dismissal. For this reason, it is important to ensure you follow the correct process and have considered all the alternatives and the reasons for redundancy before making any decisions.

At AGS HR, we can advise on all aspects of the challenges you may face, such as returning to work, reviewing employment contracts and redundancy considerations, with easy to use documents and practical advice.

For help and advice, contact our expert team at AGS HR Solutions today to discuss your requirements.