Furloughed Workers to be Eligible for Full Redundancy Pay

From Friday 31 July 2020, returning furloughed workers who are made redundant will be eligible for redundancy pay based on their normal income rather than the 80% furlough rate.

Under the furlough scheme, employees have 80% of their salaries paid by the Government up to a value of £2,500. From August, the scheme will wind down with employers paying National Insurance (NI) and pension contributions and from September, they will pay 10% of salaries plus NI and pension contributions. In October, this will increase to a 20% contribution with the furlough scheme ending at the end of that month.

According to the BBC, an estimated 150,000 people have been made redundant during the COVID-19 pandemic and this figure is expected to rise once the furlough scheme comes to a conclusion.

The new law regarding redundancy pay will also apply to statutory notice pay – the minimum notice period an employee receives before their employment ends. This timeframe varies from one to twelve weeks based on their length of service and the change in legislation ensures this notice period pay is based on an employee’s full wage rather than the lower amount being received through the Coronavirus Job Retention Scheme. In the other change, basic awards for unfair dismissal will also be based on the employee’s usual pay.

The changes to employment law will come as welcome news to those finding themselves in times of hardship, particularly during these unprecedented times. If you have any questions about the legislation changes or wish to discuss your rights, please contact our employment law expert, Michael Pope via email or directly on 020 8305 3540.