Can furloughed employees be made redundant?

The process

Under the Coronavirus Job Retention Scheme (CJRS), you may furlough an employee and then claim 80% of their wages (capped at £2,500 gross per month) and certain associated employment costs, from the government. The minimum period of furlough is three weeks, and this option is currently available until 31 October 2020.

Scheme aim

Furlough has two main aims. The first is to avoid mass job losses, which would devastate the economy. Secondly, once things start to return to normal, employers will have a workforce readily available; they won’t have to spend time and money looking for and rehiring staff. However, the unprecedented coronavirus situation will likely lead to some employers still having to make redundancies.

Furlough effect

So, where an employee has been furloughed, does this prevent you from making them redundant either during the furlough period or afterwards? In some EU countries, this is undoubtedly the case.

However, the UK government has not gone that far. There is nothing that prevents you from making an employee redundant who is or has been furloughed.

Tip: Wherever necessary, the redundancy consultation process can be started while an employee is furloughed.

Normal rules apply

Of course, a redundancy situation must be your last resort, and you will need to show that you have considered all other practical options to avoid it, e.g. reduced hours, pay reductions, redeployment, cost savings, restructuring, etc.

Plus, you will need to show that you have used and followed a fair redundancy selection procedure when you had identified potential candidates for redundancy.

Tip: As part of a fair procedure, you should seek volunteers for redundancy first. You are not obliged to accept a volunteer. You can reject a voluntary redundancy application and revert to a compulsory redundancy situation if you need to.

Redundancy payments

Employees who have accrued at least two years’ continuous service with you are entitled to receive a statutory redundancy payment (SRP) which is based on their age, length of service and a statutory week’s pay. Contact us to calculate an SRP.

Note: Furlough payments that are claimed from the government cannot be used for SRP purposes. Any required redundancy payments must come from the business.

If you would like to discuss your options, then give us a call on 01527 872752.