Redundancy rights explained for workers, including holiday, pension, and pay

AS the furlough scheme comes to an end, we take a look at your rights for redundancy.

Around 1.9 million workers are still on furlough, despite the job retention scheme being set to end on September 30.

Up to 350,000 young people face redundancy


Up to 350,000 young people face redundancyCredit: Getty

When the scheme ends up to to 350,000 young people face redundancy, with one in 50 firms expected to make cuts.

While unions have called for the scheme to become a permanent fixture of the UK’s labour landscape, Chancellor Rishi Sunak has indicated that the Government has no intention of prolonging the scheme.

But what are your rights around holidays, pensions, and statutory pay if you are made redundant?

We take a look and explain below.

How much will I get if I am made redundant?

You are entitled to statutory redundancy pay if you have worked for your employer for two years or more.

The statutory rate is based on your age, weekly pay and number of years in the job.

In England, Scotland, and Wales the maximum amount of statutory redundancy pay is £16,140. However, in Northern Ireland it is £16,800. 

You can not be paid less than the statutory amount.

The government has a calculator on its website to help you work out how much you are owed.

You may get more than this statutory amount if your employer has a redundancy scheme. 

Redundancy pay up to £30,000 is tax-free.

Will I get holiday pay?

You are still entitled to any holiday pay you are owed for untaken holiday days at the end of your notice period.

Alternatively, your employer has to let you take the days off before you leave.

However, if you have taken more days than your annual entitlement then your employer is within their legal rights to dock this from your final pay settlement.

If you have been on furlough you will still have accrued holiday days so the same rules apply.

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Will I still get maternity pay?

You are still entitled to the usual 39 weeks of statutory maternity pay if you are made redundant and your employment ends in or after your “qualifying week”, which is the 15th week before the week your baby is due.

Statutory maternity pay is:

  • 90 per cent of your average weekly earnings (before tax) for the first six weeks
  • £151.20 or 90 per cent of your average weekly earnings (whichever is lower) for the next 33 weeks

You will not get statutory maternity pay if you are made redundant and your job ends before the “qualifying week”.

However, you may be able to claim maternity allowance, which you can do at your local Job Centre.

If you are already on maternity leave and receiving statutory maternity pay when you are made redundant, your maternity leave will come to an end when your employment ends but you will continue to receive your statutory maternity pay for the rest of the 39 week period.

Keep in mind that employers cannot select a woman for redundancy purely because she is pregnant or on maternity leave – this would be unfair dismissal.

You can work out how much maternity pay you might be entitled to online here.

What happens to my pension? 

First, check what kind of pension you’ve got: you will need to decide whether to leave it where it is or transfer it somewhere else.

Most work places automatically enroll employees in pension schemes, so check with your employer to find out what is happening with your pension.

In most cases, you can either leave your pension in your existing scheme and when you retire you will receive a pension from that scheme.

Or you can transfer your pension contributions into your own personal pension.

In some cases, you can move your pension into a new employer’s scheme, if it will allow you to.

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The Money Advice Service has more useful information on pensions here.

What are my rights if I am made redundant before the end of the furlough scheme?

Recently a woman won a claim of unfair dismissal against her employer after she was made redundant without furlough being considered as an alternative

Mrs B Mhindurwa requested to be furloughed after Loving Angels Care Limited was no longer able to offer her live-in care work in May 2020.

The company claimed it was unable to offer her furlough due to the lack of live-in work.

However, the employment tribunal judge ruled that Loving Care Angels Ltd was wrong to dismiss Ms Mhindurwa without considering whether she could be put on furlough for a time to see if any other work became available.

While this decision will be taken into account in other cases, it does not set a legal precedent. You may be liable for legal costs if you lose.

You only have three months less one day to make a claim of unfair dismissal against your employer, and you must have worked at the firm for at least two years.

Your employer can also still make you redundant while you’re on furlough or afterwards.

But your rights as an employee are not affected by being on furlough, and this includes your redundancy rights, so you are still entitled to the same financial help.

When can I apply for benefits or Universal Credit? 

You should apply for Universal Credit as soon as you have confirmation of your redundancy – the money is intended to help with your living costs.

If you have worked and paid enough National Insurance contributions, usually within the last two tax years, you may be able to claim a benefit based on your contributions too.

You do not have to wait until you have used up your redundancy payment to be able to sign on.

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However, if you have more than £16,000 in savings you will not be eligible for Universal Credit.

Citizens Advice has a benefits checker where you can see what benefits you may be entitled to.

Will I get help with my mortgage or rent?

Although you won’t be automatically helped with your mortgage or rent if you are made redundant, there are still steps you can take.

You can talk to your lender if you are struggling to pay your mortgage to see if it will help.

Lenders must only use repossession as a last resort and have to prove they have done all they can to help struggling borrowers.

Similarly if you think you won’t be able to pay your rent, it is best to talk to your landlord up front.

You might be able to claim Universal Credit housing costs or housing benefit to help pay your rent.

For more help on paying your bills, visit Citizens Advice.

What if I am struggling with debts?

There are plenty of services you can take advantage of and they offer free and friendly advice on how to manage debt.

Most of them can offer you free guidance and help in person, over the telephone or online.

They can also help you take the next steps if you need a debt management plan (DMP) to tackle your debt or an Individual Voluntary Arrangement (IVA). These are agreements for managing multiple debts.

It comes as Cabinet minister reportedly suggested that employees who work from home could face pay cuts.

The furlough scheme changed last week, with the government paying less towards the cost of keeping employees on the scheme.

Rishi Sunak vowed that there would be no extension to the furlough scheme beyond September.

Rishi Sunak vows furlough WILL end in September and no plans to extend it


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