Redundancy for Furloughed Employees

Carol Smith

Carol Smith

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09 Jul 2020

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During the coronavirus pandemic, it’s important for your business to consider the future. With many industries stretched and under pressure, redundancies may seem the only option.

However, the Job Retention Scheme runs until the end of October 2020. Over the coming months, you can continue to receive varying levels of financial support for staff wages.

You can talk to us on 01455 858 132 if you need further support, too, such as alternative steps instead of making dismissals. 

You should think of furlough and redundancies separately. When you place staff on furlough, it’s a financial support process that can help you avoid having to dismiss staff. 

However, if it’s an essential requirement despite this, where do you stand? Let’s start with the most pressing question. 

Can you make employees redundant during furlough?

It’s a pressing question-- can you fire an employee while on furlough? Yes, a furlough redundancy is possible in the right circumstances. If you have a strong business case to go ahead, then you can do this. 

But there’s a redundancy process to follow—you can’t dismiss staff without a sound reason. 

So, does placing employees on furlough prevent the employer from making them redundant? No, there’s no law against this. 

But you’ll need to take the standard redundancy process steps to ensure you avoid claims of discrimination or unfair dismissal

And if you’re wondering, “Can I start a redundancy procedure while staff are on furlough?” Yes, you can begin the process if the employee is on furlough leave from your business. 

But you’ll need to notify them of this development and keep them informed. 

So, you’ll need to follow steps that are fair and establish a thorough approach to understanding the right employees to dismiss.

The furlough to redundancy procedure

If it’s essential, the process can begin even when the employee is on furlough. However, you can leave staff on it until the end of October 2020, so they have financial support. 

But the actual steps you need to take are the same as normal.

There are employee redundancy rights while on furlough in the sense you need to have a genuine reason to pursue the process, then you must:

  • Establish a strong business case to dismiss staff. 
  • Consider different options. That can include placing staff in new roles across your business or laying them off. 
  • If there are over 19 redundancies ahead, then you must hold a collective consultation. It’s a legal requirement. However, if there are fewer employees than that it’s still a good business practice anyway.
  • Decide upon a selection process (such as a points system) and use fair criteria to determine the employees to choose. 
  • Make your decisions and issue redundancy notices. 

It’s important to stress the pandemic isn’t a time to dismiss any employees you dislike for any reason. The same employment laws and employee rights still apply. 

For example, termination of employment on furlough can’t be due to maternity leave or due to a disability. That’s a breach of the Equality Act 2010 and the nine protected characteristics.

If you do regardless, that’s discrimination. It can result in a discrimination claim, which could lead to a costly employment tribunal

As such, it’s essential to follow a fair redundancy process for furloughed employees. Advancing on the steps above, that means:

  • Considering alternative roles within your business before choosing dismissals. 
  • Consulting with staff about your process. 
  • Using a fair selection process, free from direct or indirect discrimination.
  • Allowing staff to appeal your decisions. 
  • Providing staff with the correct redundancy pay and notice period.

A crucial step is to ensure your selection criteria is objective—you must put aside personal relationships with your employees when making decisions on dismissals. 

One of the most common approaches is to use a points scoring system with a clear set of criteria. This can include each respective employees:

  • Disciplinary record. 
  • Standard of work. 

You can rate employees fairly across the areas you choose. The lowest scoring staff will then face the rest of your process--and that can result in their dismissal. 

Redundancy notice while on furlough

After moving through your process, you’ll reach a stage where you need to provide written notice to affected employees. It’s a legal requirement. 

The amount of notice the employee has depends on the length of service with your business. 

  • One week of notice: This is if the employee has more than one month, but less than two years of service. 
  • One week of notice for each complete year of service: That’s if they have more than two years, but less than 12 years’ service.
  • 12 weeks of notice: For staff with more than 12 years of service. 

Part of the notice period involves finalising the final paycheck for an employee. 

For the correct pay, check the employee’s contract of employment to see if their notice period is contractual—or statutory. 

The former is what you agree in your contract of employment with the employee. Whereas statutory notice is the legal minimum you must provide. 

The pay they receive should be based on their salary—not the furlough pay they’re receiving from the UK government. 

If they have any annual leave they’re yet to take, you should factor this into their final total as well. 

Expert advice

If you need further assistance with furloughs or avoiding redundancies, or the process, then we can help: 01455 858 132

About the Author

Carol Smith

Carol joined Croner in 2001 as an Employment Consultant advising a wide range of clients on all aspects of Employment Law and HR practice. She demonstrates particular expertise in complex disciplinary, grievance matters and reorganisation / redundancy.

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Carol Smith

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