As of Friday 31 July 2020, a new law will be enforced whereby any employee that is facing redundancy following a period of furlough, will be entitled to statutory redundancy pay on the basis of their pre-furlough salary and not the furloughed amount.
There is no doubt that this will be welcome news for anyone that is concerned for their job safety at the moment as we see a lot of redundancies being made across many different industries.
This does not change the requirement that the workers will have been with their employers for two years, but it will ensure that those who face redundancy after furlough will fully receive their entitlement. This is extended to notice period as well which means that during the statutory notice that the employees gets of the redundancy, they should receive their full wages too.
The new legislation is set out within the Employment Rights Act 1996 (Coronavirus, Calculation of a Week's Pay) Regulations 2020 SI 2020/814 and will also apply for the wages claimed within an unfair dismissal claim before Employment Tribunals. The new legislation could be confusing to read and calculations for employees who do not have regular hours may be slightly more complicated, but not impossible and it ensure that employees are looked after if employers have to make the unfortunate decision of making redundancies in the workforce.
It is thought that approximately 150,000 workers have already been made redundant in the UK, but this is expected to rise.
The National Institute of Economic and Social Research think tank warned that the ending of the furlough scheme could result in up to 1.2 million Britons being unemployed by Christmas which will see unemployment rise to 10% of the population. We have discussed the changes to the Coronavirus Job Retention Scheme here.
Please note that the above summary is not intended to be comprehensive or replace independent legal advice but is simply for information.
Should you require further guidance on what the legislation means for your workforce or for your redundancy process, please do not hesitate to contact our team who will be happy to assist.
This is not legal advice; it is intended to provide information of general interest about current legal issues.