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New redundancy protection legislation came into force 31/07/2020

Category: General

Under the coronavirus job retention scheme (CJRS), employers have been able to reclaim 80% of their workers’ wages up to £2,500 per month from the government, provided that the business has been severely affected by Covid-19. Where workers are being made redundant after furlough there have been reports that they have been receiving redundancy payments calculated on the basis of their furloughed rate of pay of 80%, as opposed to their pre-furlough pay.

Workers made redundant while on furlough will be guaranteed redundancy pay based on their normal wage and not their furloughed rate under the new legislation.

The UK Business Secretary said the new rules would ensure workers on the job retention scheme were not “short changed” if made redundant.

When a worker has been made redundant, they are entitled to a statutory notice period based on their length of service. A worker might be required to work this notice period or be paid in lieu of notice. In addition, provided a worker has two years’ service, they are entitled to a statutory redundancy payment of 0.5, 1 or 1.5 week’s pay, dependant on length of service, age and pay, for each full year they have worked for their employer.

Under the change, furloughed workers would also be entitled to statutory notice pay equivalent to their normal wages, and any future unfair dismissal cases would be based on their full wages rather than pay under the furlough scheme, which can in some cases be substantially lower than a worker’s contracted pay.

Currently there is no indication if the government will resource the policing of the new legislation or run an advertising campaign to raise awareness and inform employers of the change.   

Information on redundancy can be found here:

Below is a link to UK Government information on the new legislation.

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