Guidance on Alternative Roles for Redundant Employees
Redundancy Pay for Furloughed Employees
With effect from 31 July, furloughed employees who are made redundant will
be entitled to redundancy pay based on their normal wages, not their
The government introduced this new legislation because some employers were
paying their employees severance payments based on furlough pay (80% of
normal pay, capped at £2,500 a month), rather than contractual pay.
Statutory redundancy pay calculations for employees with more than two
years’ service are based on average weekly pay over 12 weeks, together with
factors such as length of continuous service and the employee's age. Under
the new rules, employers must treat any weeks an employee spent on furlough
over the 12-week reference period as if they were working on full pay.
The cap on a week’s pay for the purpose of calculating statutory redundancy
pay remains £538, so the maximum statutory redundancy payment award that an
employee can receive is still £16,140.
Any redundancy payments already made before 31 July will not be covered by
the new rules.
Guidance Notes: Alternative roles for redundant employees
Where the redundancy of an employee is under consideration, an employer
should consider whether there is alternative employment available for the
employee elsewhere within the organisation. New Guidance Notes explain the
factors that employers should bear in mind when considering alternative
roles for redundant employees or employees at risk of redundancy.
The contents of this Newsletter are for reference purposes only and do not constitute
legal advice. Independent legal advice should be sought in relation to any specific