Following recent changes – Furloughed workers urged to know their legal rights

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Legal experts are encouraging furloughed workers to scrutinise their rights to redundancy and holiday pay, as the scheme is set for its biggest change since being reintroduced in November 2020.

From today, companies will need to contribute a minimum of 10% towards the pay of furloughed staff, with the Government topping up the remaining 70%. In August 2021, company payments will increase to 20%, with the Government paying 60%.

According to employment law expert and partner at Shakespeare Martineau, Michael Hibbs, there are a number of legal issues that could arise, should companies take the difficult decision to make redundancies as a result of the changes. These include:

  • If redundancies are made, staff are entitled to a full notice period and receive 100% of their full pay during this time;
  • Individual consultations are required before notice can be given and when there are 20 redundancies or more across an establishment collective consultation is required;
  • Employees are entitled to be paid in full when looking to take annual leave. Therefore, if an employee was to take their holiday whilst being furloughed, they must be paid in full. This includes all accrued holiday up to the redundancy termination date and
  • Those returning from furlough can carry over any holiday allowance into the next holiday year.

Michael Hibbs, who is a member of Birmingham Law Society, said: “The next few months are going to see the most significant changes to the furlough scheme since it was reintroduced in November. As a result, we could see staff being unfurloughed and being placed at risk of redundancy. Therefore, it is critical that employers and employees both understand their rights when it comes to the scheme, including those surrounding redundancy and holiday pay entitlements.”

The furlough scheme is set to come to an end in September.

Industrry reaction

Nick Bowes, Chief Executive of Centre for London said: “The facts that no one seems to want to talk about are just how hard the pandemic has hit London’s economy. The city has consistently had the highest number of staff on furlough out of any English region since July 2020. And although unemployment is down, London still has the highest unemployment rate of any region, nearly 40 per cent higher than the national average, alongside the highest increase in universal credit claims.

“This feeds into a dangerous assumption that somehow all is fine in London, and that the capital will just bounce back under its own steam. This risks the city’s recovery, and given how important London is to the UK, the whole country’s recovery too.”

“If the government is serious about levelling up, then it must look to protect jobs in London and support Londoners back into employment by investing in green jobs, enhancing further education, and supporting self-employed workers. It also has to recognise that a one size fits all approach doesn’t work for everywhere and the unique nature of London will need special tailored support to kickstart its economy.

“A furlough cliff-edge could damage London’s recovery and result in real hardship for working Londoners. And a slower recovery for London will mean less money in the Treasury to spend outside the capital on levelling up.”