Martin Lewis warns that ‘hundreds of thousands of furloughed workers could face redundancy’

According to Martin Lewis, hundreds of thousands of furloughed workers face redundancy.

Martin Lewis, founder of MoneySavingExpert.com, has issued a warning to those on furlough due to changes in the scheme set to happen in August.

Unfortunately, despite furlough being designed to keep people in employment, it doesn’t protect you from being made redundant. 

Employers will be required to start to make contributions towards costs from August, and this could mean redundancies begin to be announced soon.

This is because employers have to give 45 days notice before making redundancies, and this can still happen while staff are on furlough.

If employers think they can’t afford to start contributing towards furlough pay come August, redundancy letters could start being sent this month. 

This situation will likely spiral come October 31st, when the furlough scheme ends. 

Currently, those unable to work due to coronavirus such as hospitality staff are able to get 80% of their wages paid by the government, up to a maximum of £2,500 a month.

The scheme was launched on the 20th March and was backdated from the 1st of the same month, and as of the end of today, no new employees can be put on the scheme.  

From August the rules are changing and employers will be expected to pay the National Insurance and Pension contributions. 

From September they will also be required to pay 10% of the salary, which will be upped to 20% in October when the scheme is set to finish.

Martin Lewis has explained that this means 100,000s or even millions of people could face redundancy. This is because 8m people are currently on the furlough scheme.

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.”

If you are furloughed and made redundant it doesn’t affect your redundancy pay rights and your employer is still required to carry out a fair redundancy process.

How much you are entitled to depends on your age and length of service. If you are under 22 you are entitled to half a week’s pay for each full year; one week’s pay for each full year if you are between 22 and 41; and one and a half week’s pay for each full year you are over 41.

You are not entitled to a redundancy pay out if you have been working for your employer for under two years.

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.”

Employers are not allowed to base redundancy payout on the rate of your furlough pay instead of your usual salary.

To help those affected, Martin Lewis has released a guide to redundancy which you can see here.