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Monday 28th September 2020 Julie Edmonds 

I’m on furlough - what are my rights if I am made redundant

As the Coronavirus Job Retention Scheme (CJRS) is currently due to end on 31st October 2020, your employer may be forced to consider further costs saving measures in light of the continued impact of COVID-19 and may be left with no alternative but to consider reducing headcount and making certain roles within the business redundant. If you are on furlough then you may have been away from your workplace for several months and will understandably have questions about what your employer can and cannot do in this situation. Here are some common questions and answers on being made redundant if you are on furlough:

If I’m on furlough can I be made redundant?

Yes, but your redundancy rights will not be affected by having been furloughed.

If I am on furlough can I be given notice by my employer and can they pay me in lieu of notice?

If you are on furlough you can be served with notice to terminate your employment due to redundancy and your employer can still continue to claim under the CJRS in respect of your notice period. Your employer may want to consider paying you in lieu of your notice period (PILON) rather than you remaining an employee during this period but there is no mechanism for employers to reclaim a PILON payment under the CJRS and therefore it may be financially preferable from your employer’s perspective to keep you on furlough for your notice period so that at least part of your notice pay can be recovered under the scheme.

What payments am I entitled to?

From 31st July 2020, it was confirmed that furloughed employees must receive statutory redundancy pay based on normal wages, rather than your reduced furlough rate of pay. It also applies to your notice pay but does depend on whether your notice period is contractual or statutory. If the notice period in your contract of employment is more than your statutory notice entitlement by at least one week, this rule will not apply. Your statutory notice entitlement is one week after you have completed one month’s service and then one weeks’ notice for every complete year of service up to a maximum of 12 weeks after 12 years.

Any outstanding annual leave should also be paid at the full rate of pay if you are not required to take this leave during your notice period.

Is everyone entitled to a redundancy payment?

No. Only employees that have been employed for 2 years or more will be entitled to a statutory redundancy payment. If however your employer has a policy that offers enhanced redundancy payments then this should be followed and the same criteria may not apply. It is not possible for your employer to claim for the costs of redundancy payments under the CJRS.

My employer has offered me a settlement agreement. What does this mean?

If your employer offers an enhanced redundancy package they may ask you to sign a settlement agreement in exchange for the enhanced payments. A settlement agreement is a legal contract between you and your employer that will include terms in relation to the payments that you will receive, obligations in relation to keeping the agreement confidential and an agreement that you will not pursue a claim against them. Your employer will usually pay for you to get independent legal advice so that it is a legally binding waiver of your rights and is normally at least £500 plus VAT. If you do not sign a settlement agreement and have a complaint against your employer, you may be able to pursue a claim at the Employment Tribunal.

Is the redundancy process different if some employees are on furlough and some are not?

The fact that some employees are furloughed and some are not, should not affect how your employer approaches the issue of identifying an appropriate selection pool of roles that are affected and the process that is followed. You should not be selected simply because you are or were on furlough and should instead be selected based on who performs the same or similar work to you. Employers will need to think about how they will consult with you especially if you are working from home or on furlough and whether formal meetings will be held, either in person (subject to government guidance on attending the workplace and it being COVID-19 secure), by phone or using technology such as Zoom or Skype.

Can my employer just make the newest members of staff redundant (last in first out)?

Selecting an employee for redundancy simply because they have the shortest service could result in an unfair dismissal claim (if they have the relevant qualifying service) and potentially a claim for age discrimination on the basis that younger employees may, by virtue of their age, have shorter service. This approach used to be one of the more common ways that employers selected employees for redundancy but is now not recommended. Your employer should consider using a wider range of selection criteria such as skills and qualifications, performance and disciplinary record, only considering length of service in a tie break situation.

Am I entitled to time off to go to a job interview during my notice period?

Yes, if you are serving your notice then you have the right to take reasonable time off during working hours to look for a new job or to arrange training for future employment.

Can I still be made redundant if I am pregnant or on maternity leave?

If there is a genuine redundancy situation that affects the role that you are performing then if a fair process is followed and is not discriminatory (i.e. selecting you over a colleague just because you are pregnant), it is possible for you to be made redundant. If you are on maternity leave then you have special protection in relation to being offered suitable alternative positions but your employer must also ensure that you are included in any consultation process.

A redundancy process can be a worrying time for employees, particularly in this economic climate. If you have any questions about redundancy, your rights as a furloughed employee or have been offered a settlement agreement by your employer please contact Julie Edmonds, Head of Employment, by email jedmonds@jpclaw.co.uk; telephone 0207 644 7286 or contact her on LinkedIn.


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