New law – Furloughed employees get protected redundancy pay

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As of the 30th July 2020 the Government has brought in a new law to ensure furloughed employees receive full statutory redundancy pay based on their normal contractual hours and wages as opposed to a reduced furloughed rate.  The new legislation will mean those furloughed under the Coronavirus Job Retention Scheme (CJRS) are not receiving less redundancy pay based on a furloughed rate if they are made redundant at any point.  The changes will also apply to statutory notice pay and other entitlements under the new law.

The changes were brought in as there have been several reports of employers taking advantage of the Coronavirus crisis to pay a lower rate for redundancies rather than paying an employee’s contractual entitlement.  Employees who have more than two years of continuous service are typically entitled to a statutory redundancy payment that is based on length of service, age and pay; up to a statutory maximum of £16,140.  However, under the CJRS many employees that have been furloughed are currently being paid 80 per cent of their normal wage unless their employer has opted to top up their pay.

Furloughed employees that successfully undertake an unfair dismissal claim will also have their basic award payment based on full pay rather than the CJRS’s reduced wage rate under the new legislation.  The new law clarifies the position for employers and employees that are furloughed and subsequently made redundant to ensure they do not receive less statutory redundancy pay due to being furloughed.

Further advice

If you would like to discuss redundancy, furlough or any part of this article, please get in touch with our Employment Law Solicitor Sasha Brine by calling 07475069698