Furloughed Employee and Redundancy

Furloughed Employee and Redundancy

If an employer decides to make a furloughed employee redundant, how much do they need to pay them during their notice period?

The answer depends on how much notice the employee is entitled to.

Employee Entitlement

Under the statutory notice period scheme, an employee is entitled to receive at least one week’s notice for every year of service they have completed, up to a maximum of 12 weeks’ notice. But, this is a minimum notice period and an employee may be entitled to more notice under their contract of employment.

So, for example, if an employee has worked for their employer for 8 years then they would be entitled to 8 weeks’ notice. However, their contract may provide that they get three months’ notice, in which case they are entitled to this longer period of notice.

If an employee is only entitled to statutory notice, or not more than a week longer than statutory notice, then they must be paid their normal pay during their notice period. This would mean full pay rather than the 80% of their pay (capped at £2,500) that they are entitled to receive during furlough leave. That said, the employer will still be able to recover a percentage of the notice pay under the furlough pay scheme (80%, reducing to 70% in September and 60% in October).

But, where an employee has a contractual notice period which is more than a week longer than what they are entitled to under the statutory scheme, then their employer pays them their reduced pay under the furlough scheme i.e. 80% of their pay capped at £2,500 per month.

One final point to note, if an employer decides to pay an employee in lieu of their notice, the same rules apply as above. But, it does not look as though they can recover any of the payment from the government under the furlough pay scheme.

How Kerseys Can Help

Kerseys Solicitors Employment Law specialists are on hand to advise you further.

Please contact us at [email protected] or alternatively telephone Ipswich 01473 213311 or Colchester 01206 584584, where we will be happy to arrange a telephone call or virtual online meeting with you.