Making furloughed staff redundant: what you need to know

  • Redundancy
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Peninsula Group, HR and Health & Safety Experts

(Last updated )

Making redundancies is never easy. That goes without saying.

But when it comes to staff on furlough, it can be hard to know where to start. From government guidelines to lockdown restrictions, there’s certainly more to think about.

If you need to make furloughed staff redundant from a distance, we’re here to help. Our guide explains everything you need to know – from start to finish.   

Follow the full redundancy process

The first thing you need to know is that – legally speaking – little has changed.

Whether your team is on furlough or not, you need to carefully follow the redundancy process. If you don’t, you could face a costly tribunal. And that’s the last thing your business needs after months of lockdown measures. 

Here’s what the full redundancy process looks like:

  • Make sure it’s a last resort
  • Consult your staff at risk
  • Select staff for redundancy 
  • Give your staff notice
  • Work out redundancy pay

So far, so normal.

But how can you carry out this process smoothly if your staff aren’t in the office – or even working from home?

Make sure it’s the last resort 

First things first, you should carefully consider any alternatives to redundancy. In normal times, these include: 

  • Pausing any recruitment 
  • Pay decreases or freezes
  • Reducing overtime
  • Letting any temporary workers go

However, you now need to consider whether you can keep your employee on furlough. The Job Retention Scheme is available until the end of April 2021 – and it’s designed to prevent redundancies. 

It’s important to take advantage of the scheme if you can. Dismissing a team member without considering all other alternatives first – including furlough – could lead to an unfair dismissal claim.

It could be that you simply can’t afford to keep staff on furlough. Or it might be that your company’s needs have completely changed. Either way, you should only consider redundancy once you’re certain no other alternatives could work. 

Send an email to cover the basics

If redundancy is your only option, it’s time to start reaching out to your team. 

No matter what restrictions are in place, you can’t make anyone redundant over email. But sending an email could be a handy way to start the conversation. 

Contacting your staff before a consultation means they won’t be caught off guard on the day. This should hopefully give them chance to prepare any questions they might want to ask.

In your email, make it clear you’re considering redundancies and share your reasons why. Your email could cover details like: 

  • Letting staff know they’re at risk of redundancy 
  • Explaining how the process will go ahead
  • Sharing the date and time of the first consultation meeting
  • Why you’re hosting the meeting online

Keep it brief. An email isn’t a substitution for a consultation, so try to limit any back-and-forth. It’s best to stick to the essentials and nothing else. 

Bear in mind that your staff on furlough won’t be logging into their work accounts. In fact, furloughed staff can’t legally work for you at all – so you’ll need to send any details over a personal platform. 

If you’d rather not share these details by email, you could talk over the phone instead. Just be sure you confirm any important details in writing, too. Any misunderstandings could make the situation even harder than it already is.

Consult with your staff over a video call

When it comes to talking to your staff about redundancies, you need to have what’s called a ‘meaningful’ consultation. 

In practice, this means listening carefully to your staff. It means setting aside enough time for any questions. And it means seriously considering any ideas or alternatives they suggest. 

In the office, it’s easy to pull your team to one side for a proper chat. But since face-to-face meetings are currently off limits, a video call is the next best thing. As you can see your employee’s body language and expression, it helps you steer the conversation around their reaction. 

It’s wise to test your signal strength in advance. The last thing you need is a faulty connection or technical issues cutting you off. Not only would this be awkward, but your employee might not hear important parts of the conversation. 

Consider a collective consultation

Are more than 19 employees affected? If so, you’ll need to carry out a large-scale or ‘collective’ consultation. 

Put simply, this means you need to inform the recognised trade union – or any employee representatives – about the process. You’ll also have to consult with your team at least 30 days before you make any redundancies. 

Plus, you’ll need to let the Redundancy Payment Service (RPS) know your plans before you start consulting staff. The RPS act on behalf of the government and you could be fined if you don’t inform them. 

As your team is on furlough, it’s not as easy as just gathering your team into a meeting room. And with current social distancing measures, it’s simply not safe to host large meetings. You’ll need to host a group video call and invite the employee representatives. 

Select staff for redundancy 

Deciding who to make redundant is difficult at the best of times. Add the furlough scheme, and you could face issues you might have never expected. 

To make the decision fairly, you should set up a ‘selection pool’. This means putting everyone at risk into groups defined by their job role or set of skills. For example, a selection pool could include people who look after marketing. 

Putting staff in a selection pool purely because they’re furloughed – and nothing else – could land you in trouble. And this could lead to a tribunal for following an unfair redundancy process. 

Give staff notice and work out redundancy pay

While COVID-19 has completely changed our working lives, the same can’t be said for redundancy pay-outs. 

Your furloughed staff have the same rights as if they worked full time. A law introduced last July means that any pay-outs should be based on their normal wages – instead of their reduced furlough rate. 

Once you’ve worked out the pay, you can provide employees with their contractual notice. This should clearly outline any money you owe them. 

Claiming furlough during the notice period

If you made redundancies before 1 December 2020, you can still claim furlough for any employees still serving their statutory notice. You can’t use the grants to cover any redundancy pay – this should be paid on top of their furlough wage. 

After 1 December, however, you can’t claim furlough for anyone on their notice period. That includes both contractual and statutory notice periods.

Stay ahead of the curve with expert help

If you need to let go of your furloughed staff, you needn’t go through it alone. We’re the leading HR specialists in the UK – so whatever you’re facing, we’ve got the know-how to handle it. 

With new guidance appearing all the time, it’s never been more important to seek expert employment advice. As our team carefully monitors any changes in the law, you can feel confident you’re keeping up with all the latest advice.

If you’re an existing client, you can call us for personalised advice whenever you like–day or night. And if you’re not yet a client, simply fill out our enquiry form to speak to an expert.


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