New Employment law: Furloughed employees entitled to full statutory payments based on their normal wages

What’s the new law?

The Government has laid the Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 SI 2020/814 (The Regulations) before Parliament, to ensure that furloughed employees who are made redundant receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate.

When does it come into effect?

The Regulations came in to force on 31 July 2020.

What does it mean?

The purpose of The Regulations is to ensure that furloughed employees who are made redundant will receive redundancy pay based on their normal wage rather than their furloughed pay.

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.

These changes will also apply to Statutory Notice Pay. When an employer dismisses an employee, they must ensure that they provide the employee with at least the statutory minimum notice which ranges from 1 week to 12 weeks, depending on their length of service.

This legislation will also ensure that notice pay is based on normal wages rather than their wages under the Coronavirus Job Retention Scheme (CJRS).

Other changes coming into force will ensure basic awards for unfair dismissal claims are based on full pay rather than wages under the CJRS.

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