The Department for Business, Energy & Industrial Strategy has announced employees on furlough leave who are then made redundant will receive redundancy pay based on their normal wage, under new laws being brought in today (Thursday 30 July).

Throughout the pandemic, the government has urged businesses to do right by their employees and pay those being made redundant based on their normal wage, rather than their furlough pay, which is often less. The majority of businesses have done so, however, there are a minority who have not.

At the moment, employees on regular fixed salaries get redundancy payments based on their normal wage as if they were working full hours (so 100% of normal pay), whereas employees with fluctuating hours/earnings get a payment based on the average of their last 12 weeks’ pay – which, if they’ve been furloughed, is likely to be less than 100%.

Today the government will bring in legislation to protect workers and ensure all furloughed employees who are being made redundant receive their full entitlement.

Employees with more than 2 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.

This legislation, which will come into force from tomorrow (Friday 31 July), will ensure that employees who are furloughed receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate.

30th July 2020

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