New legislation introduced to protect redundancy pay of furloughed workers

New legislation introduced to protect redundancy pay of furloughed workers

The Government has announced that from 31 July 2020 any eligible furloughed worker that is made redundant will receive a payment based on their normal wage rather than the reduced rate of pay they may have received under the Coronavirus Job Retention Scheme (CJRS).

Workers that 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.

As well as ensuring redundancy pay is protected, the new rules also make sure that the statutory notice pay, which covers the period before a worker’s employment ends is based on an employee’s normal wages rather than the lower wage rate they may have been paid under the CJRS.

This paid notice period typically varies from one to 12 weeks’ depending on an employee’s length of service.

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.

If you would like advice on redundancy or have questions about the furlough scheme then it is important that you seek professional advice. To find out how we can help, please contact us.

Summer Economic Update

After much speculation about what would be included, the Chancellor, Rishi Sunak, delivered his ‘Summer Economic Update’ yesterday. The speech was used to unveil the Government’s Plan for Jobs, which the Chancellor is billing as the second phase in the Government’s economic response to the crisis. The announcement included the following;

Job Retention Bonus

This is a new scheme that will apply once the Coronavirus Job Retention Scheme has closed in October 2020. A payment of £1,000 will be made to employers, for every worker that they had previously furloughed and have retained continuously on the payroll until the end of January 2021. To be eligible, employees will need to earn at least £520 per month on average for November 2020 – January 2021. They will also need to been furloughed at some point during March – October 2020. Employers will be able to claim the bonus from February 2021, once all of the relevant RTI payroll information has been submitted. Further details of this scheme are expected by 31 July, with full guidance due in the Autumn.

Kickstart Scheme

The Kickstart Scheme is aimed at support the creation of high quality six month placements for 16 – 24 years on Universal Credit. The apprenticeships funding will provide £2,000 to employers in England for every apprentice hired under the age of 25 and £1,500 for each newly hired apprentice aged 25 or older. This funding is in addition to schemes already in place to support employers in taking on apprentices.

Reduction in Stamp Duty Land Tax

A temporary cut to Stamp Duty Land Tax (SDLT) was announced. The nil-rate band is to increase from £125,000 to £500,000 on residential property purchases that are completed between now and 31 March 2021.

VAT cut for Hospitality and Tourism Sectors

The VAT rate for the Hospitality and Tourism sectors is to be cut from 20% to 5%. The measures relate specifically to food and non-alcoholic drinks, as well as accommodation and admission to attractions. Further details expected to be published later.

The change comes into effect on Wednesday 15 July 2020 and will be in place temporarily until 12 January 2021.

Eat Out to Help Out  

Eat Out to Help Out scheme will provide a discount of 50 per cent on the total cost of a meal and non-alcoholic drinks, up to a maximum of £10 per person on Mondays, Tuesdays and Wednesdays in August 2020. It has not yet been confirmed how the VAT ( at the new lower rate) will be applied to these vouchers.

A website for the restaurants, cafes and pubs and other eligible food venues, will be set up and those taking part will display a sign at their establishment. It is expected that the website will launch on Monday 13 July 2020.

It is expected that further details will be issued over the coming days and weeks regarding the above schemes and we will provide further commentary as and when this is available

View official documents

Don’t forget to make an SEISS claim by 13 July!

Don’t forget to make an SEISS claim by 13 July!

Individuals eligible for the first Self-Employment Income Support (SEISS) grant must submit their claim by 13 July 2020.

The first round of SEISS funding allows self-employed individuals, who have been adversely affected by COVID-19 on or before 13 July 2020, to claim a taxable grant worth 80 per cent of three months’ average monthly trading profits, capped at a total of £7,500.

The cut-off date was implemented as part of an extension to the SEISS, which will see the second round of funding worth 70 per cent of three months’ average trading profits, capped at £6,570, launched on 17 August 2020.

You can claim for the SEISS if you are a self-employed individual or a member of a partnership and all of the following apply:

  • You are carrying on a trade that has been adversely affected by Coronavirus;
  • You traded in the tax year 2018-2019 and submitted a Self-Assessment tax return on or before 23 April 2020 for that year;
  • You traded in the tax year 2019-2020;
  • You intended to continue to trade in the tax year 2020-2021;
  • You have trading profits of less than £50,000 and more than half of your total income comes from self-employment. This can be with reference to at least one of the following conditions:
    • Trading profits and total income in 2018-19
    • Average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

The scheme is not available to people working through their own limited companies.

Click here to make a claim for the SEISS

If you are unsure of your eligibility or need support making a claim we are here to help. To find out how our team can assist you, please contact us.