New law to ensure furloughed employees receive full redundancy payments

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Purple HR update on the new law being introduced on 31 July 2020 to ensure furloughed employees receive full redundancy payments.

Today, the government has announced that from tomorrow, 31 July 2020, it will bringing in a new law to ensure Furloughed employees receive full pay for any redundancy payments, rather than a reduced furlough rate.

• New law will ensure that furloughed employees receive statutory redundancy
pay based on their normal wages, rather than a reduced furlough rate
• changes will mean those furloughed under the Coronavirus Job Retention
Scheme are not short-changed if they are made redundant
• the changes will also apply to statutory notice pay and other entitlements,
providing some reassurance during this difficult time

Furloughed employees who are then made redundant will receive redundancy pay based on their normal wage, under new laws being brought in today (Thursday 30 July).

Today the government will bring in legislation to protect workers and ensure all furloughed employees who are being made redundant receive their full entitlement.

Employees with more than 2 years’ continuous service who are made redundant are usually entitled to a statutory redundancy payment that is based on length of service, age and pay,up to a statutory maximum.

This legislation, which will come into force from tomorrow (Friday 31 July), will ensure that employees who are furloughed receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate.

These changes will also apply to Statutory Notice Pay, which is where employees must be given a notice period before their employment ends, varying from at least one week’s notice up to 12 weeks’ notice, depending on how long they have worked for their employer. During this notice period, employees must be paid.

This legislation will also ensure that notice pay is based on normal wages rather than their wages under Furlough.

For more information and advice see www.purplehr.co.uk