Although the government has rolled out the Job Retention Scheme (“Furlough”) to try and help employers to retain staff during the outbreak of Coronavirus (Covid-19) employers may still decide to make employees redundant.
The government’s guidance for employees states:
“Your employer can still make you redundant while you’re on furlough or afterwards. Your rights as an employee are not affected by being on furlough, including redundancy rights.”
The government’s guidance for employers states:
“Employees still have the same rights at work, including redundancy payments. Grants cannot be used to substitute redundancy payments.”
Employees are usually dismissed by reason of redundancy when their employer:
- Closes or intends to close the business;
- Closes or intends to close a particular workplace; or
- Requires fewer employees to carry out the work.
The label of redundancy is relatively straightforward for an employer to demonstrate. The dismissal and the procedure followed must be reasonable in the circumstances. It is therefore important for an employer to show that it:
- Gave warning in advance of possible redundancies;
- Consulted with the employees;
- Selected a pool of candidates for selection;
- Devised a fair selection criteria and scored fairly;
- Properly considered alternative employment; and
- Followed a fair appeals procedure.
Are you entitled to Redundancy Pay?
You are entitled to statutory redundancy pay if you have been in continuous employment for two years or more. The amount you will receive will depend on how long you have been in the job, your age, and your salary. You may be entitled to a greater redundancy payment if your contract of employment provides for it.
Notice pay and Holiday pay
If you are made redundant, you are entitled to receive notice of termination of employment. This is a minimum of one week’s notice for each year you have worked for them, up to a maximum of 12 weeks’ notice. You may be entitled to a greater length if it is provided for in your contract of employment. You will also be entitled to payment for accrued but untaken holiday.
Many employers request a redundant employee to sign a legally binding document known as a Settlement Agreement (formerly named a Compromise Agreement). This is an important document because it has the effect of preventing the employee from pursuing certain claims against the employer. It also sets out important terms relating to the termination of the employee’s employment and often contains restrictions relating to matters such as confidentiality. The employee must receive independent legal advice before such an agreement will be valid. We are experts in advising on such agreements and can often negotiate more favourable terms.