Redundancy and furlough: good practice

Employers who are considering make furloughed workers redundant should consider how they do so and take into account a number of employment issues in order to avoid being taken to employment tribunal.



From August employers will have to start contributing to the furlough scheme and that will be crunch time for many employers, despite the bonus offer from the Chancellor. Indeed we are already seeing daily announcements of job cuts.

So how should employers tackle redundancies after furlough. XpertHR has just published guidance on this issue which makes clear that the Coronavirus Job Retention Scheme does not directly affect the normal operation of employment law when it comes redundancies. That means employers still have to behave reasonably in making an individual redundant, not target specific groups, such as women, and should consult collectively.

In addition, employers will have to grapple with new challenges, including avoiding penalising furloughed employees when selecting for redundancy. They need to exercise particular care in relation to those whose return from furlough is impacted by underlying health concerns or ongoing childcare obligations. The issues of notice pay for redundant employees and calculating statutory redundancy pay are also potentially affected by employees being on furlough.

XpertHR’s guidance includes the following advice:

  • Ensure that furloughed staff are consulted as part of any redundancy exercise, using online platforms or other forms of electronic communication when appropriate.
  • Construct a pool for selection based on the future needs of the business and avoid penalising employees who have been furloughed.
  • Avoid using the fact that an employee has been furloughed as a reason for selecting them for redundancy.
  • Be aware of the potential for discrimination in selecting employees whose vulnerability to coronavirus makes it harder for them to return to work.
  • Avoid penalising employees whose difficulties with childcare affect their attendance at work.
  • Consider if furloughed employees given notice of redundancy should have their pay topped up to normal pay for the duration of the statutory notice period.
  • Avoid dismissing furloughed employees without notice as the Coronavirus Job Retention Scheme will not cover a payment in lieu of notice.
  • Before asking employees to return to work during the notice period, consider if the terms of their furlough indicated that they would be away from work for a set period.
  • Calculate redundancy payments on the basis of a normal week’s pay rather than employees’ pay while on furlough (unless they have no normal working hours).

To view the guidance on carrying out redundancies where employees have been furloughed click here.

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