Furloughed employees to receive full redundancy payments
The Department for Business, Energy & Industrial Strategy announced yesterday, 30 July 2020, that the government will be bringing in a new law to ensure furloughed employees receive statutory redundancy pay (SRP) based on their normal wages, rather than a reduced furlough rate.
It is expected that this new law will come into force today.
This follows the concern that employees who are presently on furlough and are receiving a reduced salary will be paid a lower statutory redundancy payment (SRP) if they are made redundant later on.
For example, many employers who are utilising the Coronavirus Job Retention Scheme (CJRS) are opting to pay furloughed staff 80% of their salary to match the contribution provided by the Government. Prior to this new law coming in to force, an employee’s SRP could arguably be based on the average of their last 12 weeks’ pay, which, if they have been furloughed could be less than their usual 100% salary.
This new law helpfully clarifies the position for both employers and employees and seeks to ensure that furloughed employees who are subsequently made redundant do not receive less SRP due to being furloughed.
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This information is correct at 9.30am on 31 July 2020.
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