Posted on: Aug 04,2020
If you are being made redundant, make sure that your redundancy pay is calculated on your normal unreduced pay, and not your reduced furlough pay. It was unclear whether furloughed workers would be entitled to a statutory redundancy payment based on their normal (unreduced) salary, or whether it would be acceptable to calculate entitlement based on the reduced, furlough rate of pay.
The Government has published the new Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020, which came into effect on 31st July 2020. Under the new Regulations, all workers will be entitled to statutory redundancy pay calculated on their unreduced normal salary. The statutory cap on a week’s pay will remain in force. The Government says that the new law ensures workers will not be ‘short changed’ because they are furloughed.
Where employers need to make redundancies during furlough leave, the Coronavirus Job Retention Scheme (CJRS) can continue to be used to reclaim notice pay up to the amount of the statutory cap. CJRS cannot be used to pay redundancy payments, which must be financed by your employer.
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