The government has confirmed today (30 July) that furloughed employees should receive full redundancy and notice pay, rather than a reduced rate.
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.’
Over nine million people are being supported by the Coronavirus Job Retention Scheme. The government said that a potential loophole had been allowing a minority of employers to pay redundancy and notice pay based on flexible working hours or furlough.
‘New laws coming into force today will ensure furloughed workers are not short-changed if they are ever made redundant – providing some reassurance for workers and their families during this challenging time’ said Mr Sharma.
The new legislation, which will come into force from tomorrow (31 July), reiterates the government’s advice to do right by their employees, ensuring that furloughed employees will receive statutory redundancy pay based on their usual wages.
The new law will also cover statutory notice pay, and other employment rights that rely on average weekly pay, including unfair dismissal.
Employees who earn a fixed salary are entitled to receive redundancy pay based on their usual salary, however, those who work flexible hours are entitled to receive redundancy pay based on their last 12 weeks’ pay.
Where companies offer an enhanced redundancy package, the legislation will not make an impact, and employers must ensure they comply with the terms of the employee’s contract.
For more information and to find out how we can help you, please contact our Employment Team on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.