New Law Covering Redundancy Pay for Furloughed Staff
Post Author:
Rona Burns
Date Posted:
August 19, 2020
Share This:
Categories:
New legislation has been introduced by the government to ensure that any furloughed staff who are made redundant receive redundancy pay based on their normal wage.
Employees with more than two years of continuous service are entitled to statutory redundancy based on their length of service, age and pay, up to a statutory maximum.
Calculating statutory redundancy pay is normally based on the average weekly pay for the 12 week period up to the date that the employer notified the employee they are being made redundant. The new legislation means that employees furloughed during the 12 week period prior to being made redundant are entitled to statutory redundancy pay based on the standard 100% wages, and not their furlough pay, which can be up to 20% lower.
The government is urging employers to avoid making redundancies wherever possible, but if redundancy is unavoidable, the law provides protection for the employees to ensure that they receive the full amount they are entitled to.
The legislation also covers Statutory Notice Pay, ensuring that employees are given a notice period based on the length of service with the employer. This is a minimum of one week and a maximum of twelve weeks before their employment ends. Employees must be paid during their notice period.
Other employment rights relying on average weekly pay are also covered by the new law, meaning that any related calculations should be based on the full wages and not pay under Coronavirus Job Retention Scheme.
The law came into effect on 31 July 2020.
More details can be found at:
The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.
Photo by Olivier Collet on Unsplash
