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.