HUNDREDS of thousands of workers face redundancy from furloughed jobs, Martin Lewis has warned today.
THE MoneySavingExpert.com founder says changes to the furlough scheme in August that require employers to start contributing towards costs could see redundancies begin to be announced.
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That’s because employers are required to give 45 days’ notice before cutting roles – and they can still do this while staff are on furlough.
So if employers don’t believe they can afford to start making contributions towards furloughed pay from August, it means redundancy letters could start arriving this month.
And the situation may only spiral as we approach the end of the scheme on October 31.
Furlough payments are made to those who are unable to work due to the coronavirus crisis.
Currently, you get up to 80 per cent of your wages paid by the government, up to a maximum of £2,500 a month.
The scheme launched on March 20, although it was backdated until March 1.
Today (June 10) is the last day for employers to place newly furloughed workers onto the scheme.
But from August, employers will have to contribute national insurance and pension contributions rather than the government picking up this bill.
While from September they will have to pay 10 per cent of salaries as well, before this increases to 20 per cent of salaries from October when the scheme is due to finish.
Mr Lewis reckons this means hundreds of thousands of people, or maybe even millions, could be faced with redundancy given there are more than 8million people currently furloughed.
In his weekly email published today, Martin said: “I’m sorry for the stark warning. From August, employers need to start contributing towards furlough costs.
“This means redundancy is likely by then for those in roles employers don’t consider viable after October, when furlough ends.
“As redundancy can require a 45-day consultation period, that means many will soon get letters. I suspect this will impact 100,000s or even millions.”
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:
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 via Gov.uk.
A HM Treasury spokesperson said: “The Coronavirus Job Retention Scheme is one of the most generous schemes of its kind and it has so far protected more than 8million jobs and supported millions of businesses during this crisis.
“As the economy re-opens, we will continue to look at how to adjust our support in a way that ensures people can get back to work, protecting both the UK economy and the livelihoods of people across the country.”
Martin has launched a redundancy guide to help those struggling.
If you are made redunant while on furlough, your rights to statutory redunancy pay still apply – see the box above for more on this.
But be warned some firms have tried to pay laid off workers less based on their furloughed rate of pay, rather than their usual salary.
If this happens to you, you should formally challenge the decision, and as a last resort consider taking your boss to an employment tribunal.
