Your rights during redundancy

Redundancy pay if you've been on furlough

If you’ve been on 'furlough' (temporary leave) during the coronavirus (COVID-19) pandemic, you must use your full normal pay when working out redundancy pay. 

For example, if your weekly pay is usually £300 but you received 80% pay while on furlough, your redundancy pay must be your full normal pay of £300 a week.

If your pay is different each week, your weekly pay must be worked out by using the 12 weeks leading up to the day you got your redundancy notice. Your pay must be topped up to 100% for any hours you were furloughed. Add up the total amount of pay during the 12 weeks and divide it by 12 to get your weekly pay. 

Example 1 – someone who works variable hours

An employee who is 35 has worked for their employer for 6 years and their hours vary each month. They normally get paid £10 an hour. 

They’ve been on furlough for the last 12 weeks and received 80% of their pay (£8 an hour). 

The employer already worked out the employee works an average of 30 hours a week when they claimed from HMRC's Coronavirus Job Retention Scheme. 

The employee must receive £300 a week redundancy pay as their wages must be topped up to 100%.

Example 2 – someone on flexible furlough 

An employee who is 35 has worked for their employer for 6 years. 

They normally work 30 hours a week and have agreed to be furloughed for half this time.

They now work for 15 hours a week on full pay, receiving £10 an hour. They’re put on flexible furlough on 80% pay for the remaining 15 hours, receiving £8 an hour. 

When calculating redundancy pay, their wage on flexible furlough must be topped up to 100%. This means they must receive £300 a week redundancy pay. 

Example 3 – someone who has returned to work and is working more hours than usual

An employee who is 35 has worked for their employer for 6 years.

The employer had already worked out the employee's average hours and full normal pay when they claimed from HMRC's Coronavirus Job Retention Scheme. The employee normally works 30 hours a week on £10 an hour, receiving £300 a week.

They spent 6 weeks on furlough earning 80% pay. When they returned to work, they worked 40 hours a week for 6 weeks, receiving £400 a week.

To work out their weekly pay, the employer adds up the 6 weeks of pay during furlough, at their full normal pay of £300 a week. Then they add up the 6 weeks the employee worked at £400 a week.

The employer adds up these figures and divides by 12 to work out their average weekly pay of £350 a week. This means the employer must pay the employee £350 redundancy pay a week.