What you need to know about furloughed employees being made redundant

Since the end of March, the term ‘furlough’ has become a common phrase. HMRC and the Government have been regularly updating us with information surrounding this scheme otherwise known as the Coronavirus Job Retention Scheme. HMRC has stated, “8.7 million employments have been supported through the scheme under claims made until 31 May, with these claims totalling £17.5 billion.” With the scheme’s main aim being to keep people employed, unfortunately the scheme can’t shield you from redundancy.

For those unsure of the CJRS, it essentially means that the Government will reimburse 80% of furloughed employees wages. The cost of this is capped at £2,500 per month, it was also possible to backdate this to the 1st March 2020. This scheme is set to continue until the end of October and is available to all UK businesses. From the 1st July, the Government introduced what’s called the flexible furlough scheme. This is where businesses have the flexibility to bring furloughed employees back part time. This will help to rejuvenate the economy.

The next question is, can furlough protect employees from redundancy?

The short answer is, no.

For all employers, this is what we feel you need to know about making furloughed employees redundant.

The redundancy process is similar to our redundancies guide. This redundancies guide will share the steps to take and why, before you move onto tackling this in conjunction with the furlough scheme.

Like any redundancy process you need to ensure this is the last resort. Therefore, before laying off an employee, you’ll need to think about if your employees could remain on the CJRS. If this isn’t possible then the next step is to get in touch with the furloughed staff.

Something we must add in addition to the above is ensuring you do not penalise furloughed employees when creating a selection pool. This must be a fair and measured decision. You’ll also need to be aware of potential discrimination against employees shielding and of employees who are unable to return to work due to childcare. These are areas out of their and your control and should be wavered when making any final decision.

Following your decision, you’ll need to decide if the employee will be returning to work their notice period and if you’ll be topping up their pay during this notice period. We’d always advise checking the employment contract before making a payment in lieu and always giving a furloughed employee a notice period to ensure the CJRS covers payment.

Finally, you’ll need to settle payment including time off, expenses etc. as mentioned in our redundancy guide. This payment will not be based on their furlough pay – The final payment should be calculated from their regular week’s payment.

Please note, this is only a guide. Should you need any support surrounding redundancy or redundancy and furlough leave, please get in touch.

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