Redundancy payments for furloughed employees to be based on normal wage

Legislation comes into force on Friday 31 July 2020 to ensure that furloughed employees who receive statutory redundancy payments, and/or statutory notice payments and/or unfair dismissal compensatory awards have those sums calculated on the basis of their full, normal rate of pay rather than any reduced rate they may have been receiving while on furlough under the Coronavirus Job Retention Scheme (CJRS).

A press release by BEIS on 30 July 2020 announced that legislation was to be made to address this issue. The legislation would be designed to ensure that furloughed employees receive statutory redundancy pay (and other statutory payments, as mentioned above, that are calculated on the basis of a week’s pay) based on their normal wages, rather than a reduced furlough rate.

The promised legislation, the Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020, SI 2020/814, was made on 29 July 2020, laid before Parliament on 30 July 2020 and comes into force on Friday 31 July 2020.