What To Do If Made Redundant While Furlough | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 19/08/2020

Although the Government’s Coronavirus Job Retention scheme does not end until 31 October 2020, thousands of people on furlough are already being made redundant. As part of our series on redundancy, we’ve taken a look at what you’re entitled to if made redundant while on furlough.

What redundancy pay are you entitled to?

In the previous article in the series, we looked in more detailed at what money employees are entitled to if they are made redundant. Back in July, the Government protected worker’s redundancy pay if on furlough, which means that those who are made redundant while on furlough are entitled to the redundancy pay they would receive if they were in full employment.

How much notice should you be given?

Again, those who are selected for redundancy while on furlough are entitled to the same rights and notice period as they would be if in full employment. By law, employers have to give at least one to 12 weeks’ notice when making someone redundant (the notice period will depend on how long the employee has been at the company). The employer can pay the employee the money for their notice period without serving the proper notice period and they also have the option of allowing the employee to wait out their notice period without having to work at the company.

Sorting out your finances

Those who have already been made redundant, or who are furloughed and feel that they are at risk of redundancy, should start taking steps to sort out their finances now. A first step should be to know exactly what debts need to be repaid and, if possible, reduce the interest being paid on debt. Lenders are unlikely to give loans, credit cards or overdrafts to those who are redundant, and many have stopped lending to those on furlough – so consolidating debts or taking out an interest-free credit card is unlikely to be a solution. But those who are likely to face difficulties repaying debts should contact their lender, who may be willing to come to an agreement to reduce the repayments until the borrower is able to make full repayments again, although the borrower should keep in mind they will likely to have to repay any interest accrued during this time.

If you are struggling to repay debt, consider speaking to Citizen Advice or a free debt charity.

Those facing redundancy should also take note of what savings and/or investments they have. Ideally, they should have three to six months’ worth of outgoings saved in a savings account that can be accessed quickly. They can also consider using some savings to reduce/pay off debts, as savings rates are typically lower than the interest paid on debt, but keep in mind some savings should be held back in case of emergencies. Those with savings should also be aware that if they have more than £16,000 in savings, they cannot apply for universal credit.
In addition to this, now is the time to reduce outgoings as much as possible. Cancel any unnecessary subscriptions and, if possible, hunt around for cheaper energy, broadband and home insurance deals.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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