Redundancy Post Furlough, What now?

The government has released guidance for individuals who were furloughed, then made redundant because their employer is now insolvent. 

Individuals placed on furlough using the Coronavirus Job Retention Scheme (CJRS), then made redundant because their employer is now insolvent, may qualify to receive payments from the Insolvency Service. However, payments can only be made to those dismissed by their employers without being re-employed. 

When an individual is made redundant, they are entitled to the following rights; redundancy pay, a paid notice period and any money their employer owes them i.e. unpaid wages. Even if the individual was placed on furlough when they were made redundant, these rights still apply.

To begin a claim, the individual needs a case reference number from the insolvency practitioner dealing with their employer’s insolvency (starting CN). Redundancy pay, alongside any other money owed, can be applied for online.

What can be applied for?

Redundancy pay: If individuals have worked for their employer for 2 years or more they are eligible to apply for redundancy pay. Note: the 2 year period includes furlough time. 

Holiday pay: Individuals can apply for the days they have accumulated but not used during their current annual leave year. However, full yearly holiday entitlement will not be paid if they are only part way through their annual leave.

Money owed by employers: Individuals may claim money for other payments such as overtime, commission and unpaid wages. 

On the CJRS scheme, employees should have been paid 80% of their monthly wages. If they were paid this amount, we would advise against making a claim as they will not be entitled to the difference between their furlough pay and full salary.

If employers fail to supplement their employees’ pay to match their last furlough pay, employees can apply for the sum they are owed when claiming redundancy payments. They can make this claim in the ‘Wages and other money owed’ section of the online claim.

Notice pay: Individuals can apply for notice pay if they were not given any notice before being made redundant. They have to have worked for their employer for at least one month.

Individuals will be asked about their rate of pay when applying for redundancy payments. Rate of pay is based on weekly pay. If they were not paid weekly, the government provides information on how the rate of pay is calculated. They need to provide their pre-furlough salary as most payments will be calculated based on a full salary rather than earnings made on furlough. 

Individuals not consulted before being made redundant may be eligible for a protective award. A claim to an employment tribunal has to be made to get this compensation payment. 

Whilst the government is offering compensation, there are limits for each type of payment. These limits differ from the CJRS’s limits. However, if the government’s compensation does not cover the amount an individual is owed, they can register as a creditor in the insolvency to apply for compensation: https://www.gov.uk/register-creditor-bankruptcy. 

Find Out More

To find out more about the redundancy payments process, check out the government’s online guidance.

If you are worried about debt, bankruptcy or possible insolvency, contact Asset Solutions today on 0800 689 3861. Our experienced team members provide unrivalled assistance to individuals throughout the entire insolvency process and help to stop bankruptcy.

We understand that anyone facing problem debt is likely to feel overwhelmed and intimidated. That’s why we’re here to support you throughout the process and help you achieve the best results possible for your situation. Contact us today for more information.