Could furlough pay affect future redundancy pay?

[Blankiefan]

I'm a high earner in a role that could be made redundant in a post-COVID world if our business wants to streamline the organisation.

If they furlough everyone under the Govt scheme and my earnings go down to £2.5K pa for, say, 12 weeks but later make me redundant, could that 3 months of lower pay be included in my earnings calculation for redundancy? I've a long LOS so it'd make a material impact to any settlement.

TIA

Yes, it could. Redundancy pay is normally based on current earnings/salary unfortunately.

We've asked the question of our employer and this is their position - discretion/enhanced redundancy pay could be pushed for but they'd be under no obligation to honour it.

Can I also check, if furloughed and then made redundant during the furlough period, would the redundancy payment be based on the furlough payment?

My husband is a high earner and has been furloughed to £2500, meaning his pay has been cut by considerably more than half. He has been at the company for 18 months so if he were to be made redundant, he'd just get his one months notice as per his contract.

But if he is made redundant while furloughed, will that payment be £2500 instead of his actual salary?

If so, his seems like a very easy way for firms to make high earners redundant at a very low cost! He is considering resigning before signing the letter to accept the furlough. Because then the one months notice (presumably at full salary) will last longer (redundancy looks likely).

Redundancy pay is worked out on the 12 weeks prior to dismissal so yes, it would be calculated on the furlough pay.

Get out now whilst you can!

Remember redundancy is capped to £525 so If you’re high earner it might end up not affecting you the salary if they pay statutory only
www.gov.uk/redundancy-your-rights/redundancy-pay

I was wondering the same thing about reduced hours. I can very easily imagine a situation where we Are asked to go part time to try to save jobs and then are made redundant anyway.

I think redundancy pay should be based on precovid measures position.

Sorry to jump on, I did start a new thread but no one replied! Do you know if the £2500 you will receive will be gross or net? Again this makes a big difference to a lot of people. Thanks

Gross

Thanks @CloudsCanLookLikeSheep even worse than first thought for us. Hope everyone else comes through ok

Statutory redundancy pay is based on your contractual rate of pay capped at £525 a week (increasing to £538 on 6 April).

If you have a contractual right to enhanced redundancy pay it is based on your rate of pay in force when you were made redundant but temporary, short term changes, ie maternity, furloughed do not count so your ‘real’ rate of pay is used.

Hi Parker
Is that definitely correct? I'd be very grateful if you could post a link to that as our employer says differently. Thanks so much.

Also would the same rules apply to resignation do you know?

www.xperthr.co.uk/faq/where-an-employee-has-recently-changed-from-full-time-to-part-time-hours-how-should-their-redundancy-payment-be-calculated/60812/

This might help. If someone resigns they won’t be entitled to redundancy pay.

The article doesn’t cover furloughed pay as there is no case law on this yet. The principal is a temporary change doesn’t affect calculations of pay for redundancy but a permanent one does. Ie if someone reduces their hours when returning from maternity leave and it’s a permanent change, their redundancy would be on their reduced hours

I understand, thank you very much.

Agree with Parker231.

The gov is covering 80% of your pay up to a max of £2500 a month. So your actual pay rate is still your pay rate.