Furloughed employees who are made redundant will receive statutory redundancy pay based on their normal wage

New legislation comes into force on 31 July 2020

Furloughed employees who are made redundant will receive statutory redundancy pay based on their normal wage, the Department for Business, Energy and Industrial Strategy (BEIS) has confirmed.

Announcing new legislation - the Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 (SI.No.814/2020) - which comes into force on 31 July 2020, BEIS highlights that, although it has urged businesses who have made furloughed employees redundant during the coronavirus (COVID-19) pandemic to pay redundancy pay based on normal wages as opposed to the rate of furlough pay, this has not always happened.

Confirming that the new legislation will ensure that all workers get their full entitlement, Business Secretary Alok Sharma said - 

'The government is doing everything it can to protect people’s incomes through our Coronavirus Job Retention Scheme, which is now supporting over 9 million jobs across the UK.

We urge employers to do everything they can to avoid making redundancies, but where this is unavoidable it is important that employees receive the payments they are rightly entitled to.

New laws ... will ensure furloughed workers are not short-changed if they are ever made redundant – providing some reassurance for workers and their families during this challenging time.'

NB - the regulations set out how a week’s pay is to be calculated in the case of an employee who has been furloughed under the Coronavirus Job Retention Scheme, for the purposes of calculating -

• any statutory remuneration for time off to look for employment or arrange training;
• any statutory notice payment;
• any statutory sum resulting from a failure to provide a written statement of reasons for dismissal;
• any statutory sum resulting from a failure to comply with an order for reinstatement or re-engagement;
• any statutory compensation for unfair dismissal; and
• any statutory redundancy payment.

For more information see New law to ensure furloughed employees receive full redundancy payments from gov.uk