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.