The UK Government has published legislation, which will ensure that all furloughed employees receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate.
The Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 (the Regulations) ensure that various statutory entitlements based on a week’s pay and connected with the termination of employment are not reduced as a result of an employee being furloughed under the Coronavirus Job Retention Scheme. The entitlements included in the Regulations are:
- redundancy pay for those with more than 2 years’ continuous service who are made redundant and who are entitled to a statutory redundancy payment that is based on length of service, age and pay (up to a statutory maximum);
- statutory notice pay;
- compensation for unfair dismissal;
- a payment resulting from a failure to provide a written statement of reasons for dismiss
- a payment resulting from a failure to comply with an order for reinstatement or re-engagement;
- remuneration for time off to look for employment or arrange training; and
- redundancy payment by reason of being laid off or being placed on short time working.
The Regulations will come into effect on 31 July 2020. Generally regulations do not come into force until a minimum of 21 calendar days after being laid before parliament. However, the Department for Business, Energy and Industrial Strategy has considered that the commencement date is justified for the following reasons: First it has considered the interplay between the complex statutory scheme for calculating a week’s pay and the factual circumstances in place. Second, there is concern that if there was a delay some employers may bring forward redundancies on potentially less generous terms and third, the early date will ensure that as many employees as possible will benefit from the regulations and protect more employees from the risk of reduced payments related to their termination.