Does furlough affect redundancy payments?

As with other employment rights, an employee’s redundancy rights are unaffected by being furloughed.

Contractual or Statutory Redundancy Pay

Any employee who has been employed by the company for a continuous period of more than two years is entitled to receive a statutory redundancy payment (or a contractual redundancy payment if applicable). A statutory redundancy payment is calculated by reference to the period during which the employee has been continuously employed, his or her age and gross weekly pay.

Statutory redundancy payments to an employee on furlough leave are calculated on an employee’s pre-furlough salary. Companies cannot reclaim the cost of statutory or contractual redundancy payments under the furlough scheme.

Notice pay

Employees who are made redundant whilst on furlough leave are entitled to be given notice of termination in accordance with their contracts of employment.

Notice pay during the notice period is payable at the rate of the employee’s pre-furlough salary. Companies are likely to be able to reclaim the cost of an employee’s notice pay (up to 80% of salary and subject to the £2500 per month cap) for any notice period whilst on furlough. However, employers cannot reclaim any payment in lieu of notice under the furlough scheme. The costs of notice pay after 1 December will no longer be covered by the CJRS.