I’ve been made redundant, how much notice pay should I receive?

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Question:

I work for an employer who has furloughed me. They have just advised that they are making me redundant rather than bringing me back to work. I have a month notice period – should my notice pay be based on my 80% furlough pay?

Answer:

Thank you for your email.

I'm sorry to hear of your redundancy.

If you are going to be made redundant, you are entitled to a minimum period of notice. This will be the amount stated in your employment contract (if you have one) or the statutory minimum notice period, whichever is longer. You can find more about statutory minimum notice on the ACAS website.

As explained on GOV.UK, a law has recently been passed which says that if you are entitled to statutory minimum notice, then your notice pay (which has to be calculated in line with a formula set out by government) should be based on your pre furlough pay, not at the 80% furlough rate.

If you have a contractual notice period that is at least a week longer than the statutory minimum (for example, your employment contract has a month’s notice, but the statutory minimum is a week), then in this situation, things are not so clear cut, as under general principles, your notice pay is calculated in line with what is contained in your contract.

This means that if your usual ‘contractual’ pay, has effectively been varied to 80% of full pay by a furlough agreement then it would appear notice pay can be paid at this level. However, this is an employment law issue and outside of our area of expertise and there may be some circumstances when this is not appropriate. You may wish to seek employment law advice if you believe this applies to you. ACAS be contacted for free support and advice on employment law issues or you may wish to try a local solicitor or your trade union, if you belong to one.

Your employer can also ask you to take any unused holiday during your notice period (even if you aren’t actually going to be working anyway, provided they give you the correct notice – see below). To the extent that they do this, this should be paid at your normal rate of pay, so if your employer is paying you 80% pay during your notice period, they will probably have to top this up, if you take your unused holiday. See GOV.UK for more information on holiday pay.

Please note your employer must give you twice as much notice as the amount they want you to take (as explained on GOV.UK). So, if you have 10 days’ worth of accrued leave for example (remembering that you will have continued to accrue holiday pay during furlough), they must give you 20 days’ notice. If it is not possible for you to take your unused holiday, after the 20 days notice, within your notice leave period, then they must pay you the excess on your departure. 

In terms of any statutory redundancy pay you are entitled to, this should also be calculated based on your pre-furlough pay, not at the 80% furlough rate. Our guidance explains more about your entitlement to any statutory redundancy pay and how it should be calculated, as well as explaining about the tax consequences of redundancy.