Employment Legislation

How Does the Job Retention Scheme Affect the Redundancy Process?


How Does the Job Retention Scheme Affect the Redundancy Process?

Due Date

31 July 2021


How does the CJRS scheme affect the redundancy process? Can staff be made redundant because they have been on furlough? And should employers be using the new, flexible furlough scheme before contemplating the redundancy process?

Key considerations

  • Staff should not be selected for redundancy solely because they are on furlough. Doing so may give rise to discrimination claims in addition to unfair dismissal claims. For example, dismissing a selection of staff placed on furlough because they are shielding for health reasons.
  • It’s not uncommon for claims to the Employment Tribunal to include challenges based on whether a genuine redundancy situation exists and whether the dismissal could have been avoided through other means. The fairness of a redundancy dismissal depends on the circumstances at the time. It is not necessarily unfair to make redundancies when furlough is available.
  • During the two phases of the CJRS, the second phase being flexible furlough, it is arguable that by utilising the CJRS the employer should be able to stave off the need for redundancies whilst the scheme is in place. An employer who fails to do so, or at least give serious consideration to that possibility, may find a redundancy dismissal in these circumstances held to be substantively unfair.
  • Employers facing the prospect of having to make redundancies should also bear in mind the collective consultation provisions which are triggered when an employer is making 20 or more redundancies in a 90-day period. These provisions can be rather complex.
  • Remember: if you do make a furloughed employee redundant, their redundancy pay is protected. This means they are eligible for redundancy pay based on their normal wages – not the furlough rate. This is effective from 31 July 2020.
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