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Furloughed staff made redundant to receive pay based on normal wages

Paloma Kubiak
Written By:
Paloma Kubiak

Furloughed employees will receive statutory redundancy pay based on their normal wages, rather than a reduced rate, the government has announced.

A new law which comes into effect on Friday 31 July means those who are furloughed under the Coronavirus Job Retention Scheme who are then made redundant won’t be “short-changed” based on pay.

Rather than receiving a lesser furlough rate of redundancy pay, these staff will receive their full entitlement with money based on their normal wages.

Currently employees with more than two years’ continuous service who are made redundant are usually entitled to a statutory redundancy payment that is based on length of service, age and pay, up to a statutory maximum.

Business secretary, Alok Sharma, said: “The government is doing everything it can to protect people’s incomes through our Coronavirus Job Retention Scheme, which is now supporting over nine million jobs across the UK.

“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.”

The changes will also apply to statutory notice pay which is where employees must be given a notice period before their employment ends, varying from at least one week’s notice up to 12 weeks’ notice, depending on how long they have worked for their employer. During this notice period, employees must be paid their usual rate.

Further, in unfair dismissal cases, staff will be eligible for full pay rather than wages under the CJRS.

Under the CJRS, the government pays 80% of an employee’s salary up to £2,500 a month plus National Insurance and pension contributions. It is gradually being wound down with the scheme coming to an end in October.

Earlier this month, the chancellor announced a Job Retention Bonus of £1,000 to UK employers for every eligible furloughed employee they bring back to work.

See’s Furlough’s imminent end: Your redundancy rights for more information.