Can employees be made redundant while on furlough?

by Kate Palmer, Associate Director of Advisory at Peninsula

In response to the challenges faced by thousands of employers because of the COVID-19 pandemic, the UK Government set up the Coronavirus Job Retention Scheme. The Scheme is aimed at helping employers retain staff during this period where some business may have had to close entirely or operate according to a much-reduced demand.

It provides for a grant to cover 80% of employees’ pay, to a maximum of £2,500 per month, where they consent to be designated as furloughed workers. A furloughed worker is one who does no work for the employer for a temporary period. There is no requirement to top up workers’ pay to 100%.

If the Scheme were not in place, some employers may have found themselves in the position where they would need to make employees redundant due to lack of work. For now, the Scheme is helping employers in this situation maintain the employment of their workforce, albeit on less pay in most circumstances.

While it may seem to run against the grain of the Scheme which is in place to prevent redundancies, employers may still find themselves in a position where they are forced to close their business.

Current Government guidance on the Scheme confirms that an employee can be made redundant while on furlough. Alternatively, the employer may wait until the Scheme closes and the wage grant is no longer available before commencing the process.

Under normal employment law rules, employers should follow a fair procedure when making redundancies. These rules have not been relaxed and will continue to apply as normal to employers who are accessing the Scheme.

A key element to a fair redundancy procedure is a consultation with employees which enables them to take part in the process, allowing them to suggest alternatives to their redundancy dismissal before final decisions are made. This would typically involve face to face meetings which are not likely to be possible due to social distancing. Employers must find alternative ways of consulting with employees and should not view social distancing as a reason to avoid consultation.

Government guidance also confirms that the grant available under the Scheme will not cover redundancy pay.