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Redundancy after furlough

The Coronavirus Job Retention Scheme scheme (or the furlough scheme as it has become known) has been operating in its current form since 1 November 2020 but is due to end soon on 30 September 2021. 

A survey carried out by the British Chamber of Commerce (BCC), showed that 1 in 5 companies are considering redundancies as furlough comes to an end and businesses try to recover from the effects of the pandemic. If you are an employee currently on furlough and think you might be made redundant, or your employer has informed you of potential redundancies, it is important to be aware of your rights.

For tailored advice on your circumstances, please contact our employment law team on 01292 289 584 or complete our online enquiry form

The importance of knowing your redundancy rights

Being furloughed does not take away the right to redundancy payments (if eligible) or the right to be treated fairly during the redundancy process and your rights as an employee have not changed as a result of furlough and the pandemic.. 

An employer must have a genuine business reason for making someone redundant. If not, this could amount to unfair dismissal (regardless of whether or not the employee is on furlough).

Right to consultation 

If your employer is planning on making redundancies, you have a right to a consultation. If they do not adopt a fair consultation process and fail to properly consider alternatives to redundancy, this could amount to an unfair dismissal.

If the criteria used to select candidates for redundancy are considered unfair, this could also constitute unfair dismissal.

Redundancy payments: what can I expect?

You will only be entitled to redundancy pay if you have worked for your employer for two years or more.

The way in which redundancy payments are calculated is prescribed by law and is based on on your pre-furlough salary, your age and length of service as follows:  

    • 1.5 week’s pay for each year of employment after your 41st birthday
    • 1 week’s pay for each year of employment after your 22nd birthday
    • ½ a week’s pay up to 22nd birthday

You will not pay tax on your redundancy payment but payments are capped at 20 years of employment.

There is also a cap on the amount that can be paid, but some employers pay over and above the statutory maximum. If you are made redundant after 6 April 2021, weekly pay is capped at £544 and the maximum statutory redundancy pay you can receive is £16,320.

Other redundancy rights

You will be entitled to work your notice period unless your employment contract says otherwise. An employer can pay you a salary in lieu of notice which will be taxable. 

Settlement agreements

In some cases, your employer might offer you a settlement agreement which will generally include an enhanced redundancy package. However, you must obtain legal advice before accepting the terms of a settlement agreement.

If you have been offered a settlement agreement as part of the redundancy process, please see our article here for more information and guidance. 

Unfair dismissal

If you consider the reasons given for redundancy are not genuine or that you may have been selected unfairly, you may be able to make a claim for unfair dismissal. In order to do so you must have worked for the company for two years (this includes any time taken for parental leave). In some circumstances, you can bring a claim for unfair dismissal if you have worked for an employer for less than two years, if the reason for dismissal is deemed ‘automatically unfair’.

If you are concerned about redundancy or believe you have been unfairly selected for redundancy, you may be able to bring a claim for unfair dismissal.

Redundancy Lawyers Ayr, Kilmarnock, Irvine, Dumfries and throughout Scotland

We have considerable experience in advising in redundancy matters. If you require advice then please contact us by telephone on 01292 289 584 or via our online enquiry form

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