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Legal Updates

Furlough: increased redundancy and notice pay for some employees

30 July 2020 #Employment


The government has announced a new law, effective from  31 July 2020 introducing changes regarding payments on termination of employment to employees who are, or have been, furloughed.

There has been no public consultation on these changes.

The main changes are:

  1. Where furloughed employees are made redundant and have been working for their employer for 2 years or more, their statutory redundancy entitlement will be based on their pay before they were furloughed rather than the pay they received under the Coronavirus Job Retention Scheme (CJRS).
  1. Basic unfair dismissal awards will be calculated in the same way: based on pre-furlough normal pay rather than pay under the CJRS.
  1. Entitlement to Statutory notice pay will also be based on pre-furlough wages rather than wages under the CJRS. This entitlement applies to employees whose contractual notice period is less than one week longer than the statutory minimum.

The new law does not extend this protection to employees whose contractual notice period is at least a week longer than the statutory minimum. For example, an employee on furlough with 5 years’ service and a three-month notice period falls outside these protections so the employee would be entitled to CJRS pay only during their notice period.

Employees with regular hours and pay who have been on furlough were already entitled to statutory redundancy pay (and statutory notice pay, if applicable) based on their pre-furlough pay.

However, these changes will increase entitlements for employees who do not have normal working hours because the weeks on furlough will be counted as if they were weeks where the employee was earning full pay.

Read the full guidance

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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Russell  Dann

Russell Dann
Associate

E: rdann@clarkslegal.com
T: 0118 960 4653
M: 0792 014 4165

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