Redundancy pay protected for furloughed workers

Redundancy pay protected for furloughed workers

A new law means that furloughed employees to receive full redundancy payments

  • Furloughed employees to receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate
  • Changes will also apply to statutory notice pay and other entitlements, providing some reassurance during this difficult time

Speaking on BBC Radio 5 Live with Laura Whitmore last Sunday. We discussed how furlough will be coming to an end on 31st October 2020. 9.5 million jobs put on furlough since March according to HMRC records. For many people furlough has already come to an end, and people have been made redundant throughout lockdown.

New wave of redundancies due at the end of July

With employers being asked to contribute towards furloughed costs at the end of this month. We will sadly witness a further wave of redundancies.

The Government introduced a new law today to ensure that furloughed employees receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate.

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).

Throughout the pandemic, the government has urged businesses to do right by their employees. The majority of businesses have done so. However, there is a minority who have not.

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.

New law comes into effect Friday 31st July

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.

The government is doing everything it can to protect people’s incomes through our Coronavirus Job Retention Scheme, which is now supporting over 9 million jobs across the UK.

We urge employers to do everything they can to avoid making redundancies, but where this is unavoidable it is important that employees receive the payments they are rightly entitled to.

New laws coming into force today will ensure furloughed workers are not short-changed if they are ever made redundant – providing some reassurance for workers and their families during this challenging time.

Business Secretary Alok Sharma

Changes will also apply to Statutory Notice Pay

Something 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 the CJRS.

Other changes coming into force will ensure basic awards for unfair dismissal cases are based on full pay, rather than wages under the CJRS.

Job Retention Bonus to encourage firms to keep on furloughed workers

In March, the government established an unprecedented package of support for companies of all sizes.

Through the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme and the Bounce Back Loan Scheme. More than one million loans have been approved.

The Government has also introduced a new Job Retention Bonus to encourage firms to keep on furloughed workers. A one-off payment of £1,000 will be provided to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021.


  • An employee will be entitled to statutory redundancy pay if they have been working for their employer for 2 years or more
  • The new legislation will ensure that payments received in relation to statutory redundancy payments are calculated based on an employee’s normal pay, rather than furlough pay (potentially 80% of their normal wage)
  • Calculating statutory redundancy pay for employees relies on inputting average weekly pay, alongside other factors such as length of continuous service and the employee’s age.
  • Average weekly pay is usually worked out by adding the pay received over the 12 weeks up to when the employer notifies the employee they are being made redundant and dividing by 12 to get the average.
  • This legislation ensures that employers must treat any weeks an employer spent on furlough over the 12-week reference period as if they were working, and on full (100%) pay
  • Legislation does not impact any enhanced redundancy pay that may be stipulated in the terms and conditions of an employee’s individual employment contract but applies to basic statutory redundancy pay entitlements
  • Law also covers other employment rights that rely on average weekly pay, including notice pay, unfair dismissal, and short-time working
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How to get through redundancy

Being made redundant can be a very stressful time, both emotionally as well as financially. When you are being made redundant, make sure that you understand your rights.

1. Know your rights

Redundancy is a form of dismissal from your job. It happens when employers need to reduce their workforce.

If you’re being made redundant, you might be eligible for certain things, including:

  • redundancy pay
  • a notice period
  • a consultation with your employer
  • the option to move into a different job
  • time off to find a new job

You also have specific rights if your employer is insolvent.

If you’ve been made redundant because of coronavirus (COVID-19), your employer might be able to re-employ you and pay 80% of your wages.

Selection for redundancy must be fair. You cannot be selected because of age, gender, or if you’re disabled or pregnant. If you are, this could be classed as unfair dismissal.

2. Get advice

You can get advice on redundancy from Acas (Advisory, Conciliation and Arbitration Service) or Citizens Advice.

3. Find a solicitor

Depending on your circumstances. You may be able to get free legal advice as a one-off such as Law Works who offer free 30mins sessions. You may not need a solicitor depending on how straightforward the redundancy process is.

4. Trade Unions

If you are an existing member of a Trade Union. Ask them to guide you and make sure that your company follows a fair process.

5. What if I am being offered a settlement agreement?

Sometimes an employer will offer you the chance to sign a settlement agreement. This is usually offered when you are being managed out of the workplace. It is a legal way of both parties agreeing to part ways. A settlement agreement is often given to employees with an enhanced payout, due to the fact that you agree to forgo any rights to a tribunal.