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Female frustrated at dealing with furlough holiday and redundancy situation

Posted on 7 October 2021

Understanding furlough, holidays and redundancy

Posted in Advice

According to the Office of National Statistic, 5.2% (1,76 million) of adults aged 16 and over were unemployed in December 2020, the highest record since 2015.  

In the three months to July 2021 there were approximately 1.55 million people unemployed and at the end of July, 1.6 million people were still on furlough. Whilst this was the lowest figure since the start of the pandemic, according to Resolution Foundation, it is estimated that 1 million people remained on furlough until the 30 September 2021, when the furlough scheme ended. 

Although the economy has reopened and there has been steady growth, thousands of people are expected to face redundancy. 

Holiday and furlough

Employees should check that any holiday, taken during a period of furlough, was paid at the amount they would have usually earned when working. 

Many employers are now faced with their employees having accrued a substantial amount of holiday days. Typically, employees should be encouraged to take paid holiday in the current leave year. 

Employers can, at their own discretion, allow employees to carry over holiday into the next leave year. Those who were self-isolating, ill or had to continue working and therefore were unable to take annual leave during the leave year may be allowed to carry over holiday days into the next leave year. The employer should give some consideration as to whether the employees should be using accrued days within a specific time frame i.e. the first quarter or 6 months.

The Working Time (Coronavirus) (Amendment) Regulations 2020 amends the Working Time Regulations 1998 and provides "where it is not reasonably practicable for a worker to take some, or all, of the holiday to which they are entitled due to the coronavirus, they have a right to carry the 4 weeks under regulation 13 into the next 2 leave years." 

If an employee is dismissed or resigns and has carried over holiday, any untaken holiday must be added to their final pay

Furlough and redundancy 

You may qualify for redundancy pay if you have worked for the employer for more than 2 years. 

If you were furloughed and made redundant because your employer is now insolvent and has not paid your redundancy pay or any accrued but untaken holiday pay, you may be eligible for help under the Insolvency Service.

If, you have been notified of a potential redundancy, the employer must still follow a fair procedure;

1. Consultation

a. Less that 20 individuals at threat of redundancy, the employer must hold individual consultations. 

b. More than 20 individuals at threat of redundancy within 90 days, the employer must hold a collective consultation. 

You should consider discussing:

(i) Ways to avoid redundancy; 
(ii) Restructure/redeployment; 
(iii) Selection criteria; 
(iv) Time off to seek new employment 

2. Selection process 

The employer must not discriminate against any person because of: 
a. Age 
b. Sex
c. Sexual orientation 
d. Disability 
e. Race 
f. Religion/belief 
g. Pregnancy/maternity/parental leave 

3. Notice of redundancy 

If you are given redundancy notice, the employer should communicate the length of your notice period and whether the intention is for you to work your notice period and receive remuneration in full or, whether the employer seeks to terminate the employment with immediate effect and pay you in lieu of your notice (PILON) 

4. Calculate your redundancy 

Redundancy pay is calculated based on: 

a. Age 

b. Gross pay (before tax). 
The maximum weekly amount you can get is £544 (even if you earned more than this)

c. Length of service 
(counting the number of full years you have been employed. Calculate this from the day you started to the day your employment end.) You can only get redundancy pay for a maximum of 20 years.

Using the figures above, the employer should calculate your redundancy pay as follows: 

  • up to age 22 - half a week's pay
  • age 22 to 40 - 1 week's pay
  • age 41 and older - 1.5 weeks' pay

Some employers may opt to offer the employee a Settlement Agreement, a legally binding agreement between the employer and employee which will set out the terms of severance but will avoid progressing through the redundancy procedure, particularly in circumstances where redundancy for an individual is inevitable. 

You can talk to our team about issues regarding furlough, holiday and redundancy. Please call 0113 218 5459 for immediate and reliable employment law advice.


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