Is Furlough a Route to Redundancy?

The purpose of the Government’s Job Retention Scheme was to ensure that employers retain and continue to pay staff during the lockdown, but as the impact of COVID continues to bite, are redundancies inevitable?

Is Furlough a Route to Redundancy?

Is Furlough just postponing the inevitable?

Since April staff have been entitled to benefit from a paid period of leave, with the Government paying up to 80% of their salary, up to a maximum amount of £2,500 per month. 

For the 9.6 million employees who have benefitted from the furlough scheme, this has been a financial life line. No one wants to have to  worry about their job security at a time when people are already concerned for their health. 

The Chancellor, Rishi Sunak, announced at an emergency budget in July that employers who take back to work any employee who has been furloughed will benefit from a bonus of £1,000 per employee. 

It does seem that as the furlough scheme winds down there is a real possibility that for some employees who have been furloughed could be on route to redundancy. 

As the furlough scheme starts to wind down, employers are now having to consider the fact that as of August they will have to pay National Insurance and pension contributions for furloughed staff. For businesses who have remained closed and been unable to trade this is a financial burden which could lead them to consider how they can afford to go forward.  

As of next month the benefits under the Job Retention Scheme will continue to reduce and wind down to 60% eventually. Employers will now face the prospect of paying a top up payment of 10% in September and 20% in October to make up employees’ wages to 80%. 

For many businesses, especially small businesses, who have not been able to trade during lockdown, retaining staff simply might not be an option. 

In these situations furlough, could possibly, be a route to redundancy. It really all does depend on factors such as the nature of the employer’s business, how the business has been impacted by lockdown and how the business anticipates it is likely to recover after lockdown. 

What is redundancy?

Redundancy is defined as circumstances where the termination of employment is attributable to the fact that the employer has ceased, or intends to cease to carry on business for the purpose of which the employee was employed. 

Essentially where a business no longer requires work of a particular kind, or has ceased or expects to cease or diminish a particular type of work redundancy might also apply. 

Any redundancy has to be genuine and an opportunistic employer cannot simply use the winding down of furlough as a way to get rid of staff. 

In order to be able to justify a redundancy dismissal the employer does need to show that there was a genuine downturn in work that the employee was employed to do and as a result of this it is not possible for that employee to continue to be employed. 

Although there are businesses where there will have been a downturn in work, wholly attributable to the lockdown, an employer who simply uses the ending of furlough to make staff redundant could be exposed to the prospect of an unfair dismissal claim. 

While the Job Retention Scheme remains in place any employer choosing to make staff redundant really does need to be able to justify their decision. An employment tribunal would take a dim view of any employer who make redundancies as a knee jerk reaction.  

Redundancy is a form of dismissal and if the employer doesn’t go through the correct process before deciding to make staff redundant, they could be exposed to the risk of an unfair dismissal claim or a discrimination claim.

The time limits for making a claim are short and any claim connected with redundancy must be brought in the Employment Tribunal within 3 months, minus a day, of the date on the event that you are complaining of. 

Contact Us Today

If you find yourself in a situation where you have been advised by your employer that they want to bring the employment relationship to an end due to redundancy, the team at Employment Law Services (ELS) can help you. Call us now for a free consultation 0800 612 4772.

Workplace Redundancies – What Every Employer Should Know

The coronavirus pandemic has had a severe impact on the economy and it is inevitable that redundancies will be on the rise, but getting this wrong could prove costly for Employers.

Workplace Redundancies – What Every Employer Should Know

The Legal Definition of redundancy

Redundancy is defined as circumstances where the termination of employment is attributable to the fact that the employer has ceased, or intends to cease, to carry out business for the purposes of which the employee was employed. 

If a business no longer requires work of a particular kind, then employees whose role it is to carry out that particular work could reasonably be dismissed by way of redundancy. 

Where work of a particular kind had ceased, or is expected to cease or diminish then this can also lead to redundancy. 


An employer with more than 20 staff at risk of redundancy in one workplace has a legal obligation to consult with staff at least 30 days before any staff are dismissed. 

Consultation and notice are completely separate. Consultation should cover the reasons for the proposals to make redundancies, identification of the job groups at risk and the number of staff who are likely to be covered by the proposals. 

The employer should also identify the selection criteria being used to score the staff who are at risk. Timescales for the procedure and proposed termination dates should also be put to staff. Where there are 99 staff or more in one workplace consultation should begin at least 45 days before the proposed date of any dismissal, however the employer can chose to consult over a longer period should they wish to do so. 

The consultation specifically should consider ways to avoid the redundancy, ways to minimise the number of staff being made redundant and ways to mitigate the impact of the dismissal. 

It may seem strange, from an employer’s perspective, that there is a legal obligation to look at ways of avoiding the dismissals as part of the consultation process. However, in reality, staff on ground level can sometimes suggest better working practices which allow the number of staff being dismissed to be minimised. 

Staff can mitigate the impact of the dismissal by using the consultation period to apply for another job. 

As well as collective consultations, which take place through trade union representatives and workplace representatives, staff should also be offered individual consultations. 

Failure to consult properly can leave the employer exposed to the risk of a protective award claim. Any employee who is made redundant without proper consultation can claim a protective award of up to 13 weeks’ pay, if 20 or more staff were made redundant in the same workplace. 

How should an employer deal with redundancy?

There are certain steps that an employer must take before they decide to make anyone redundant. 

They then need to identify a suitable pool for selection. The employer can identify the pool by identifying which jobs groups it needs to consider cutting head count in.  

Depending on the nature of the business, it can be as easy as identifying a particular group of worker. However, the employer must carefully consider whether other staff who do not technically fall within the same job group should be included in the pool. 

For example, interchangeable roles, or roles in different parts of the business which are broadly similar. 

A selection criteria should be used to look at various elements of an employee’s work history and performance. The selection criteria should be reasonable and objective. It can include elements such as disciplinary record, skills and qualifications, time keeping, absence levels and suitability to carry out future work demands for the employer.  

The scoring should be used objectively, and not just as a tick box exercise. 

It is important that the scoring is applied in a way that does not discriminate against the individual being scored. For example, time spent on maternity leave should not be recorded as an absence which brings the scoring down. Similarly, any absence which is related to a disability should not be included. 

The employer should be mindful of using scoring criteria which might cause indirect discrimination. For example, using length of service as a scoring criteria might be discriminating against younger members of staff are are likely to have shorter service. As such, an approach of last in, first out should can leave an employer exposed to the risk of a discrimination claim. 

Notice Periods

Notice periods are sometimes set out in an individual’s contract of employment. However, in the absence of this statutory notice periods would apply. These are as follows:

  • 1 month – 2 years’ service – 1 weeks’ notice
  • 2 years’ service or more – 1 weeks’ notice for each year of service, capped at a maximum of 12 weeks. 

Notice is separate from consultation and the employer must have started the consultation process before they can serve notice. The employee should either be allowed to work up until the end of their notice period or should be paid in lieu of notice. 

Redundancy Pay

Statutory redundancy pay has to be paid to all employees who made are redundant after been employed for 2 years or more. Staff who have less than 2 years’ service are not entitled to a statutory redundancy payment. 

Statutory redundancy pay should be paid based on an employee’s individual weekly pay rate and is capped at a maximum of £538 per week. The weekly entitlement amount for each full year of service are as follows: 

  • 0.5 weeks’ pay for each year of service, for staff aged 22 and under
  • 1 weeks’ pay for each year of service, for staff aged 22-41 
  • 1.5 weks’ pay for each year of service, for staff aged 41 and over

Statutory redundancy pay is capped at 20 years’ service. 

An individual’s contract of employer might give them the right to an enhanced redundancy payment, which is more generous than the statutory amount. If this is the case, the employer must make the redundancy payment based on the contractual amount. 

Other payments 

Employees being dismissed by way of redundancy are entitled to any accrued but untaken holiday pay which is due at their termination date. 

They are also entitled to receive their normal salary up until their termination date. 

Employees who do not receive all of the payments that they are entitled to can pursue a claim for unlawful deduction of wages in the Employment Tribunal. 

Is redundancy always fair?

Redundancy is a form of dismissal and if it isn’t considered correctly it can give rise to a claim for unfair dismissal or a discrimination claim. 

Employment Tribunals are generally of the view that scoring criteria must be objective and can’t be scoring should not be reached in a haphazard way. An employer really needs to be able to justify each score for the individual employee. 

Any scoring criteria which unfair or unreasonable in a way which is glaringly obvious will most likely be criticised by an Employment Tribunal. 

However, what the Employment Tribunal won’t do is make any kind of judgment on what the employee, or others who they compare themselves to, should have scored. It is not the role of the Tribunal to say that one employee should have been made redundant instead of another. 

Where an Employment Tribunal makes a finding of unfair dismissal or discrimination the employee is likely to be awarded compensation. 

Time Limits

The time limits for making a claim in the Employment Tribunal are 3 months, minus a day, from the date that you are made redundant, the date that you did not received a payment you were owed, or the date of any act of discrimination.

Support for Employers

The COVID-19 pandemic and associated furlough scheme continues to present numerous and complex challenges for Employers. 

If you are an Employer and require advice and support on extending full furlough, introducing flexible furlough, or are contemplating a restructure/reorganisation and/or redundancies as a result of the ongoing COVID 19 restrictions, call us now on 0800 612 4772 or Contact us via our website and we will set out clear options for you to help ensure you comply with your legal obligations.

Redundancy & Protective Awards

Ex-Thomas Cook workers could be in line for thousands of pounds of extra pay.

When a business goes into administration or liquidation employees have a right to claim monies owed to them by the company but how this is claimed depends largely on their status as creditors. 

Claims can be made on the National Insurance Fund via the Redundancy Payments Service (RPS), usually in the following circumstances:

1) By employees made redundant within the first 14 days of administration;

2) By those who have lost their jobs on company liquidation;

3) By preferential creditors (members of staff) who were retained during the initial administration period, but who have been unable to claim all monies owed to them from the sale of business assets.

However, where there has been complete failure by the employer to consult with employees regarding their dismissal, you can still make a claim for an additional “Protective Award” even if your employer becomes insolvent, and the tribunal is likely to award a payment of 90 days’ pay to each employee. 

What is a Protective Award?

A Protective Award is an award of compensation of up to 90 days’ gross pay, that can be awarded by an Employment Tribunal, for failure by your employer to collectively inform and consult you where you have been dismissed on the grounds of redundancy and the government’s National Insurance Fund would cover your award.

How to Make a Claim

If you are interested in making a Protective Award claim against your former employer, contact Employment Law Services (ELS) for free initial legal advice. There are very strict time limits for bringing these claims and they must be brought within three months less one day of the date of your dismissal so please contact us as soon as possible.