The current guidance allows that you can still commence redundancy consultations and make redundancies whilst employees are on furlough. The redundancy process remains unchanged and you should refer to the Redundancy Policy your Company should have in place to ensure you are following the procedures set out correctly.
What is the redundancy process?
In basic terms you should:
- Consider the roles you may wish to make redundant and be clear on the reasons why this role has been selected.
- Consider the 'pool' for redundancy, you can choose how wide this is. This would for example include all doing the same role if you have selected that role as at risk.
- Notify the individuals who are at risk of redundancy.
- Consult with those at risk, either individually or collectively. The consultation period will depend on the number of redundancies you make.
- Apply any selection criteria you have decided where applicable.
- Confirm redundancies, suitable alternative roles or confirm employees are no longer at risk.
What do I have to pay?
If you make someone redundant you have to consider the following:
- Notice pay, you must serve their contractual or statutory notice (whichever is the greater) and this is paid at full pay. You can either pay in lieu of notice and the employment end immediately or you can leave the Individual employed during their notice - either working or on furlough.
- Accrued holidays - you must either ensure an employee takes their accrued holidays during their notice period or you would pay in lieu in their final pay for any holidays accrued but not taken.
- Redundancy Pay - your Redundancy Policy will set out if you only offer statutory redundancy pay or enhanced redundancy pay. Statutory redundancy applies for individuals with more than 2 complete years service and is paid tax free.
What if I can't afford to pay the redundancy pay?
There are option dependent on whether the Company is insolvent or not.
If your Company is insolvent then employees can apply directly to the Redundancy Payment Service.
If you are solvent but cannot currently afford the payments then you can directly apply to the Redundancy Payment Service. In this case the only payment you can apply to be covered is Statutory Redundancy Pay and you will be required to agree a repayment plan to repay the amounts paid under the service.
You could also see if your employees are willing to allow you to pay their redundancy pay in installments (perhaps not over too long a period) and if so you should make this agreement in writing with them and ensure you make the agreed repayments to them on time.
Here is information on the Redundancy Payment Service.
We would always recommend, if you are unsure about the process, who should be in a pool or how to make selections that you seek professional advice. You can contact us on 0844 8797286 for free initial advice on redundancies.