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MILLIONS of workers across the UK are facing redundancy in the wake of the coronavirus crisis as many businesses fight to survive.
Shocking figures suggest that around 600,000 people have already lost their jobs during lockdown, with more predicted to be on the horizon in the coming months.
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Chancellor Rishi Sunak warned of “hardship” and job losses ahead as he stressed that he can’t save every single one.
The future of the nine million workers on the government’s furlough scheme also hangs in the balances as employers take on some of the responsibility for staff pay.
Currently, 80 per cent – up to £2,500 a month – of furlough wages are covered by the state but from August, employers must pay workers’ National Insurance (NICs) and pension contributions.
Then from September, businesses who continue to furlough employees will have to stump up 10 per cent of their wages, and 20 per cent in October.
Can I be made redundant if I’m on furlough?
EVEN though furlough is designed to keep workers employed, unfortunately it doesn’t protect you from being made redundant.
But it doesn’t affect your redundancy pay rights if you are let go from your job amid the coronavirus crisis.
Your employer should still carry out a fair redundancy process.
You will be entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you’ve been working somewhere for at least two years.
How much you’re entitled to depends on your age and length of service, although this is capped at 20 years. You’ll get:
- Half a week’s pay for each full year you were under 22,
- One week’s pay for each full year you were 22 or older, but under 41,
- One and half week’s pay for each full year you were 41 or older.
Sadly, you won’t be entitled to a payout if you’ve been working for your employer for fewer than two years.
There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.
You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.
If you’re made redundant after your company has gone into administration you can claim redundancy pay via Gov.uk.
Meanwhile, the government funding will be reduced to 70 per cent of wages from September, and 60 per cent in October.
Here, we put together a round up of everything you need to know if you’re worried that your job is at risk, including your rights and how to challenge the decision.
1. You must be given notice before being made redundant
Under employment laws, your boss can’t just cut your contract on a whim – your employer legally has to give you your statutory notice period before asking you to leave the company.
If you’ve been employed at the company for between one month and two years, you must be given at least a week’s notice.
Members of staff who’ve worked for the firm for longer than two years but fewer than 12 years require one weeks’ notice for every year of employment.
For example, if you’ve been there for two years, you require two weeks’ notice, eight weeks’ notice if you’ve been working there for eight years etc.
Employees who’ve worked for a company for 12 years or more must be given 12 weeks’ notice.
These are just the basic, statutory redundancy notice periods – you may be entitled to more time depending on your company’s policy but they cannot give you less.
“The first thing you need to do is to check your contract to see if the notice period is more than the statutory amount,” said Adam Pavey from employment solicitors Poole Alcock.
Your employer must continue to pay you during your notice period.
If “payment in lieu” is in your contract, your employment can be ended without notice but you must be paid for the work you would have carried out during your notice period in one lump sum.
This includes your basic pay and pension contributions.
Check your own contract for your workplace policy.
2. You can’t be made redundant if…
There are some circumstances that cannot be used as a reason for redundancy because they would automatically be seen as unfair dismissal.
This includes those who are pregnant, on maternity leave or for whistle-blowing.
Here’s the full list of reasons that cannot be used as a basis for redundancy, according to GOV.UK:
- Sex, gender reassignment, marital status or sexual orientation,
- Race, disability, religion or belief,
- Age,
- Your membership or non-membership of a trade union,
- Health and safety activities,
- Working pattern, for example part-time or fixed-term employees,
- Maternity leave, birth or pregnancy,
- Paternity leave, parental or dependants leave,
- You’re exercising your statutory rights,
- Whistleblowing, for example making disclosures about your employer’s wrongdoing,
- Taking part in lawful industrial action lasting 12 weeks or less,
- Taking action on health and safety grounds,
- Doing jury service,
- You’re the trustee of a company pension scheme.
3. You’re entitled to a pay out
You’ll normally be entitled to statutory redundancy pay if you’re an employee and you’ve been working for your current employer for two years or more.
You’ll get:
- half a week’s pay for each full year you were under 22
- one week’s pay for each full year you were 22 or older, but under 41
- one and a half week’s pay for each full year you were 41 or older
Length of service is capped at 20 years, and weekly redundancy pay is capped at £525 with a maximum statutory payout of £15,750.
Of course, some employers may give you redundancy packages on top of the statutory amount so check your contract.
If the company has gone under, you’ll have to apply for redundancy pay and unpaid wages online via Gov.uk or contact the Redundancy Payments Service on 0330 331 0020 if you do not have access to the internet.
The person dealing with the insolvency – known as the “insolvency practitioner” or “official receiver” will give you a “CN” (case reference number). You cannot claim without the CN.
4. You’re entitled to any unpaid holiday pay
Employers must pay you for any unused paid holiday if they make you redundant.
Don’t forget that if you’re let go from your job part way through the year then you won’t automatically be entitled to a pay out for all of your annual leave entitlement – it’s worked out proportionately.
For example, say you’re entitled to 28 days paid annual leave but you’ve been made redundant six months into the year.
What to do if your employer tries to pay you less redundancy because of furlough
JODIE Hill, an employment lawyer at Thrive Law explains the steps employees can take if they are made redundant and the business tries to use furlough pay to calculate notice or redundancy pay.
- If an employee is in this position they should initially challenge it, ensuring they have a paper trail of all correspondence.
- If that doesn’t work, raise a formal grievance.
- If the employer proceeds and dismisses the employee and pays them the lower rate, the employee could potentially bring a claim to an employment tribunal for the difference between the two pay rates as unlawful deduction of wages.
A government spokesperson said: “In the unfortunate event someone is made redundant, they can access the government’s far-reaching package of support including a half billion pound boost to the welfare system [Universal Credit].”
In the first six months you’re entitled to 14 days holiday but you’ve already taken 10 days.
That means, your employer must pay you for the four days that you haven’t taken.
However, you should also be aware that if you’ve taken more holiday days than your entitled men then your employer is entitled to dock them from your final pay.
5. You have to pay tax on pay over £30,000
You do not have to pay tax on redundancy pay, including any severance pay, worth under £30,000 – any more than this is subject to tax.
Any non-cash benefits that form part of your redundancy package, like being allowed to keep a company car, will be given a cash value that will be added to your payout.
The Money Advice Service warns that this could take you over the £30,000 threshold and you may be required to pay tax on the portion above this.
Employers will still need to deduct tax and NICs from any wages or holiday pay you’re owed when you’ve been let go from your job.
Payment in lieu will also be subject to NICs and tax.
You can work out what portion of your redundancy pay you’ll pay tax on beforehand.
For example, let’s say your redundancy pay is £20,000 plus one month’s payment in lieu worth £1,500.
The £2,000 is tax free but the £1,500 is subject to NI contributions and tax.
For a second example, let’s say your redundancy pay is £25,000 and you’re allowed to keep the company car worth £7,000 as part of your package.
The total value of your redundancy packages is £32,000 – you’ll have to pay tax on the portion over £30,000, which in this case is £2,000.
Your employer should have sorted any tax owed for you but it’s always worth double-checking as you may be owed a rebate or will have underpaid.
6. You have fewer rights if you’ve been working for the company for less than two years
Unfortunately, if you’ve been working for the company for less than two years then you have fewer rights than those who have been working for the firm for longer.
Your employer doesn’t need to give you a redundancy process and isn’t required to have an individual meeting with you either.
You’re also not entitled to a payout but you should still be paid for any unused holiday.
But that doesn’t mean that you can’t challenge your employers decision if you think you have been unfairly dismissed.
See below on how you can do this.
7. You can challenge your employers decision
Employees with over two years service have the right to claim unfair dismissal if they feel they’ve been unfairly selected.
Write to your employer explaining the reasons and you may be able to make a claim to an employment tribunal.
But be aware that you only have three months to take action after your employment ends, Citizens Advice warns, and you may have to pay tribunal fees.
Unfortunately, if you are a casual or zero hours worker and not an employee, or you are an employee with less than two years service, you can’t claim unfair dismissal unless you believe it is for one of the reasons outlined above in section 2.
In both scenarios Citizens Advice says you should consider getting legal advice.
Visit Citizens Advice to check if you qualify for legal aid or free help.
8. Redundancy shouldn’t affect future job prospects
You’re well within your rights to feel upset if you’ve been made redundant but don’t let that stop you from applying for another job.
If you’ve been continually employed for two years by the time you were issued your notice, you’re allowed a reasonable amount of time off during your notice period to look for another job and go to interviews.
But it’s also worth noting that no matter how much time you take off to look for future employment, your current employer only has to pay you up to 40 per cent of a week’s pay for it.
What to do if you have problems claiming Universal Credit
IF you’re experiencing trouble applying for your Universal Credit, or the payments just don’t cover costs, here are your options:
- Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it’s a loan which means the repayments will be automatically deducted from your future Universal Credit payout.
- Alternative Payment Arrangements – If you’re falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently, or you can split the payments if you’re part of a couple.
- Budgeting Advance – You may be able to get help from the Government for emergency household costs of up to £348 if you’re single, £464 if you’re part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You’ll have to repay the advance through your regular Universal Credit payments. You’ll still have to repay the loan, even if you stop claiming for Universal Credit.
- Cut your Council Tax – You might be able to get a discount on your Council Tax or be entitled to Discretionary Housing Payments if your existing ones aren’t enough to cover your rent.
- Foodbanks – If you’re really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussell Trust website.
For example, if you you’ve been given one week’s redundancy notice (five working days) and take four days off in total during your notice period to go to job interviews then you will only be paid for the first two days.
You shouldn’t start a new job while your working your notice period with your current employer, although you can ask if they can terminate your contract early.
Remember though, you must work your notice period unless your employer has agreed to ending it early and that doing so may reduce your redundancy pay.
9. You can claim Universal Credit
If you’re struggling to get by on redundancy pay while you search for a new job, it’s worth checking if you’re eligible for benefits such as Universal Credit.
Charity Turn2Us has a free benefits calculator you can use to work out what you might be eligible for.
Those out of work, aged 18 or over, under state pension age and with less than £16,000 in savings may be eligible to claim the welfare payments.
It’s also worth checking if you can get help from your local council or in the form of a government loan.
Check if you’re eligible for food banks.
If you don’t qualify for benefits but you’re worried about paying your mortgage, loan or rent, speak to your provider.
Mortgage providers, for example, are offering payment holidays while some banks are offering bigger overdrafts.
You should also consider turning to a free help organisation such as Citizens Advice or StepChange.
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