Fact Service August 2020

Issue 31

Furloughed workers to get full redundancy pay

Furloughed employees who are laid off will receive redundancy compensation based on their full normal pay rather than the wages received during furlough, under a new law the Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020.

Coming into effect from 31 July, it states that employees with more than two years’ continuous service who are made redundant are usually entitled to a statutory redundancy payment that is based on length of service, age and pay, up to a statutory maximum.

The changes will also apply to Statutory Notice Pay, where employees must be given a notice period before their employment ends. During this notice period, employees must be paid in line with their normal wages rather than their wages under the CJRS.

Other changes coming into force will ensure basic awards for unfair dismissal cases are based on full pay rather than wages under the CJRS.

Announcing the regulations, business secretary Alok Sharma said: “We urge employers to do everything they can to avoid making redundancies, but where this is unavoidable it is important that employees receive the payments they are rightly entitled to.”