Can furloughed employees be made redundant?

You might have furloughed members of staff or be planning on doing so. Where an employee has been furloughed can you make them redundant during or after their furlough period?

The process

Under the Coronavirus Job Retention Scheme you may furlough an employee and then claim 80% of their wages (capped at £2,500 gross per month) and certain associated employment costs, from the government (see The next step ).

The minimum period of furlough is three weeks and this option is currently available until 31 October 2020 .

Scheme aims

Furlough has two main aims. The first is to avoid mass job losses, which would devastate the economy. Secondly, once things start to return to normal, employers will have a workforce readily available; they won’t have to spend time and money looking for and rehiring staff.

However, it’s likely that the unprecedented coronavirus situation will lead to some employers still having to make redundancies.

Furlough effect

Where an employee has been furloughed, does this prevent you making them redundant either during the furlough period or afterwards? In some EU countries, this is certainly the case.

However, the UK government hasn’t gone that far. There’s nothing that prevents you from making an employee redundant who is or has been furloughed.

Tip. Where necessary, the redundancy consultation process can be started whilst an employee is furloughed.

Normal rules apply

Of course, a redundancy situation must be your last resort and you will need to show that you’ve considered all other practical options to avoid it, e.g. reduced hours, pay reductions, redeployment, cost savings, restructuring, etc.

Plus, you’ll need to show that you’ve used and followed a fair redundancy selection procedure when you’ve identified potential candidates for redundancy (see The next step ).

Tip. As part of a fair procedure, you should seek volunteers for redundancy first. You aren’t obliged to accept a volunteer. You can reject a voluntary redundancy application and revert to a compulsory redundancy situation if you need to.

Redundancy payments

Employees who have accrued at least two years’ continuous service with you are entitled to receive a statutory redundancy payment (SRP) which is based on their age, length of service and a statutory week’s pay. Use our ready reckoner to calculate an SRP (see The next step ).

Note. Furlough payments that are claimed from the government cannot be used for SRP purposes. Any required redundancy payments must come from the business.

Furloughed employees can be made redundant during or after their furlough period. However, normal redundancy procedure rules continue to apply and eligible employees must receive statutory redundancy payments. Volunteers for redundancy can be sought in the first instance but you aren’t obliged to accept any applications.

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