Coronavirus: your questions answered

06 April 2020

Furlough and redundancy

Does the prospect of the furlough scheme make it unfair to make employees redundant?

It will certainly be a relevant consideration. There may well be circumstances in which any reasonable employer would conclude that the job retention scheme means that there is no need to make employees redundant. The extent to which the employer could recover its wage costs by placing employees on furlough will certainly affect the reasonableness of any decision to proceed with redundancies.

The retention scheme does not in itself protect employees against redundancy. Nor does it cover all of the costs associated with employing somebody. In the absence of an agreement from an employee to accept the sum provided by the scheme for the duration of the furlough, and depending on the terms of the contract, the employer of furloughed employees could still be facing considerable costs.

It would seem likely however that an employment tribunal would take the view that a reasonable employer would at least explore the options presented by the scheme and whether an employee would accept the associated drop in pay for the duration of the furlough before concluding that employees should be made redundant. While the scheme itself does not require employers to take part, it is difficult to see why an employer would refuse to at least consider doing so and discuss the matter with employees who would otherwise be made redundant.

Can employees be furloughed during their notice period?

There is nothing in the scheme to prevent this.

Can a furloughed employee still claim a redundancy payment if laid off for four weeks or more?

No. There is an incredibly complicated procedure under which an employee who is laid off without pay can claim a redundancy payment after four weeks when there is not likelihood of a return to normal working within the next four weeks. To qualify, however, the lay-off in question must be unpaid. Since furloughed employees will be paid up to 80 per cent of their wages, their period of furlough will not count as a lay-off under the statutory procedure for claiming a redundancy payment.

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