What is statutory redundancy pay, how much notice must your employer give and what are my rights?
MILLIONS of Brits face redundancy over the coming months as government support for businesses affected by coronavirus is eased.
As many as 135,000 jobs are on the line, experts warn, amid fears of an "economic Armageddon" unless workers return to offices.
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Shocking stats show that 2.6million workers may be unemployed by the end of the year and that 649,000 people are already out of a job since lockdown.
Figures released yesterday by the Bank of England (BoE) suggest that another 1.3million jobs - on top of those already lost between March and May - will be axed before the year is out.
In a ray of hope, the central bank also predicts that things will start to look better in the beginning of 2021.
Currently there are nine million workers on the government's furlough scheme, which sees 80 per cent - up to £2,500 a month - of wages covered by the state.
Can I be made redundant if I'm on furlough?
EVEN though furlough is designed to keep workers employed, unfortunately it doesn't protect you from being made redundant.
But it doesn't affect your redundancy pay rights if you are let go from your job amid the coronavirus crisis.
Your employer should still carry out a fair redundancy process.
You will be entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you've been working somewhere for at least two years.
How much you're entitled to depends on your age and length of service, although this is capped at 20 years. You'll get:
- Half a week’s pay for each full year you were under 22,
- One week’s pay for each full year you were 22 or older, but under 41,
- One and half week’s pay for each full year you were 41 or older.
Sadly, you won't be entitled to a payout if you've been working for your employer for fewer than two years.
There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.
You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.
If you're made redundant after your company has gone into administration you can claim redundancy pay .
But many businesses have announced cuts as the scheme begins to be wound down.
Since August 1, employers are responsible for paying furloughed workers' National Insurance and pension contributions.
Then from September, firms that continue to furlough employees will have to stump up 10 per cent of their wages, and 20 per cent in October.
The amount the government pays will also be reduced to 70 per cent of wages in September and 60 per cent in October.
Personal finance expert at money.co.uk Salman Haqqi warns that the changes are likely to cause a "significant" number of furloughed workers to be made redundant.
He previously told The Sun: "Unfortunately, it looks like some businesses may not be able to make it work financially and will have to downsize or cease trading.
"This may result in significant redundancies as businesses buckle under the economic pressure caused by Covid-19.";
Chancellor Rishi Sunak has also warned of "hardship" and job losses ahead as he stressed that he can't save every single one.
Your redundancy rights vary depending on how old you are and how long you've been in the job for.
If you're worried about the future of your job, you can speak to - Advisory, Conciliation and Arbitration Service - for free and impartial advice.
It's an independent body funded by the government, and works with millions of employers and employees to improve workplace relationships.
In the meantime, we've spoken to an expert to take you through your redundancy rights if you're worried about the future of your job.
How much notice must your employer give you?
Under employment laws, your boss can't just cut your contract on a whim - your employer legally has to give you your statutory notice period before asking you to leave the company.
If you've been employed at the company for between one month and two years, you must be given at least a week's notice.
Members of staff who've worked for the firm for longer than two years but fewer than 12 years require one weeks' notice for every year of employment.
For example, if you've been there for two years, you require two weeks' notice, eight weeks' notice if you've been working there for eight years etc.
Employees who've worked for a company for 12 years or more must be given 12 weeks' notice.
These are just the basic, statutory redundancy notice periods - you may be entitled to more time depending on your company's policy but they cannot give you less.
"The first thing you need to do is to check your contract to see if the notice period is more than the statutory amount," said Adam Pavey from employment solicitors .
Your employer must continue to pay you during your notice period.
If "payment in lieu" is in your contract, your employment can be ended without notice but you must be paid for the work you would have carried out during your notice period in one lump sum.
This includes your basic pay and pension contributions.
Check your own contract for your workplace policy.
Will I get a payout if I'm made redundant?
If you've been working at a company for more than two years you're entitled to a pay out to help you through an uncertain time while you find a new job.
According to statutory redundancy pay rights, you'll get half a week's pay for each full year you were under 22 and working at the company.
For each full year you worked aged 22 or older, but under 41, you'll get one week's pay and one and a half week's pay for each full year you were 41 or older.
The length of service is capped at 20 years though so you'll get the same statutory payout as you would if you'd worked for 25 years.
Unfrotunately, if y ou've been working for a company for fewer than two years, you won't be owed any money.
";The rights in relation to redundancy really kick in when you have two years’ service," explained Mr Pavey.
"Until you have provided two years’ service for your employer, you do not have any rights to a redundancy payment and it is relatively straightforward for an employer to simply dismiss you.
"In relation to the process itself, you should be consulted with during the redundancy process and your views should be considered fully by your employer."
You won't be entitled to statutory redundancy pay if your employer agrees to keep you on even if it's in a different role.
You also won't get a payout if you've been dismissed for misconduct.
Do I pay tax on the pay out?
You do not have to pay tax on redundancy pay, including any severance pay, worth under £30,000.
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You will have to pay the taxes on payments that are more than this.
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Your employer will however deduct tax and National Insurance contributions from any wages or holiday pay that they owe you.
Your employer should have sorted any tax owed for you but it's always worth double-checking.