Labour Research August 2020

Law Queries

Redundancy after furlough

Q. My workplace is closing down and I’ve been given notice of redundancy. My employer has calculated my redundancy pay based on my furlough pay, which is only 80% of what I used to earn. Is this right?

A. The government’s guidance on the Coronavirus Job Retention Scheme is clear that employees’ redundancy rights, along with all other employment rights, are not affected by furlough.

This means that employees with two years’ service who are made redundant have a right to a statutory redundancy payment as well as any contractual redundancy payments.

Although it’s not explicitly stated, this should that mean statutory redundancy pay is calculated at your pre-furlough rate, since this is your normal week’s pay. This is currently capped at £538 per week.

Your employer must also give you notice of dismissal. Statutory notice should be paid at your pre-furlough rate, but there are arguments that any additional contractual pay can be paid at your furlough rate, depending on your contractual terms.