Who is not entitled to redundancy pay and how is it worked out for staff who have been on furlough?

legal updates

For anyone who has been employed less than 2 years, there is no entitlement to a redundancy payment.

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

As we start to come out of lockdown, even if dealerships are doing well with people spending their cancelled foreign holiday money on cars, we are seeing that businesses have taken lockdown as an opportunity to review processes and further embrace digital technologies. These reviews are leading to restructures and redundancies. 

For those businesses who find themselves in the unfortunate position of making redundancies, we have produced a redundancy pack for our members which sets out all the necessary steps to be taken to ensure they go through a fair process and which will help them avoid an Employment Tribunal claim. 

For anyone who has been employed less than 2 years, there is no entitlement to a redundancy payment and neither does the employer have to go through any set procedure. This is mainly because, unless there is an exemption such as discrimination or whistle blowing (which is likely to cover any employee who reports their employer for furlough fraud), anyone employed under 2 years does not have the right to make an Employment Tribunal claim for unfair dismissal.

However, even if they have been employed for less than 2 years, they will have the right to make a claim to an Employment Tribunal for Wrongful Dismissal (which is different to unfair dismissal). This means they must be paid what is due to them including any holiday entitlement they have built up while on furlough plus their normal notice period (normally a week in this scenario unless the contract says different).

For those who have been employed for over 2 years, they will be entitled to a redundancy payment in addition to their accrued holiday pay and notice period. If there is nothing in the contract in regard to redundancy pay, they are entitled to the statutory minimum. This can be worked out very easily via the Government calculator. Normally for those who are on commission, their weekly pay (which is a required field on the calculator) is based on an average of the last 12 weeks wages. However, for those who have been on 80% furlough with a £2500 cap, the last 12 weeks wages may not reflect what they normally take home. While the furlough guidance is silent on this, we have checked the wording of the Employment Rights Act 1996 and that refers to a working week’s pay and so as those staff will not have been working while on furlough, we suggest the relevant 12 week period for them in regard to calculating redundancy pay, is the 12 weeks prior to being furloughed.  

It is important to get both the process (for those with more than 2 year’s service) and the payment right if you want to stay out of an Employment Tribunal and so if you are a member and have any questions please contact us to talk it through and if you are not yet a member, if you sign up to get support on this process, you will also get access to all year round phone and casework support on employment, consumer and any other motor trade related legal issues plus access to our award winning HR Manager software which makes HR a breeze. 


Leading experts in print, promotional clothing, staff uniforms, branded merchandise and PPE. Involution is your brand partner for promotional marketing and workwear, a one-stop-shop for your branded marketing needs for any business size and industry.

Nona BowkisHead of Legal Services / SolicitorRead More by this author

Related Legal Updates

Extension of Redundancy Protection for Pregnancy and New Parents

Explore the strengthened redundancy protections for new parents with significant amendments to maternity, adoption, and shared parental leave rights, effective from April 2024, ensuring enhanced job security during critical family milestones.

Changes to Flexible Working

Unveil the new landscape of flexible working rights with the Employment Relations (Flexible Working) Act 2023, now granting ‘day-one’ rights to employees and setting a precedent for more adaptable workplace practices effective from 6 April 2024.

New employment legislation effective from 6 April 2024

Enhanced employee rights, offering day-one entitlements to carer’s leave, flexible working arrangements, and extended redundancy protection for pregnant employees and those on family leave.

Wages increasing from 1 April 2024

With effect from 1 April 2024, the hourly rates of pay are…

Employment Law: Carer’s Leave

The regulations explicitly safeguard employees from any detriment or dismissal resulting from taking or seeking to take carer’s leave.

Employment Law: Annual Leave Changes

Several significant changes came into force on 1 January 2024 that affect the statutory annual leave and pay entitlements.

The office Christmas party season is here

Where an employee makes comments concerning a person’s body parts or style of dress that are intended to be good-natured but are perceived as offensive…

Get in touch

Complete the form to get in touch or via our details below:

01480 455500

Vinpenta House
High Causeway

By submitting this quote you agree to our Terms & Conditions and Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.