The Government announced on the 30th July, that a new law has been passed which will ensure that employees who are furloughed will receive a statutory redundancy payment as per their normal wage, instead of their reduced furlough rate. This legislation came into force on Friday 31st July 2020.
The reason for this law being introduced is because the Government have found a small number of businesses making redundancy payments at employee’s furloughed salary not their normal salary. This is despite the Government continually urging businesses through the pandemic to make people redundant on their normal wage. The Government wish to protect employees as much as they can during this time and ensuring that they receive their normal wage when being made redundant is one way to achieve this.
Employees are entitled to a statutory redundancy payment if they have 2 or more years’ continuous service. In order to calculate a staff member’s statutory redundancy payment you will need;
- Length of service
- Age at the point they are being made redundant
- Weekly pay before tax and any other deductions
The following government redundancy calculator will work out your staff’s statutory redundancy entitlement, click here to access this tool.
This new legislation also takes into account any Statutory Notice Pay, this is the statutory minimum notice period businesses can give employees depending on their length of service with the organisation. Statutory notice period varies from one month up to 12 weeks’ notice depending on their service. Remember, during an employee’s notice period pay they should receive their normal wage not the furloughed wage.
We are trying to keep information up-to-date but as guidance is constantly changing, please check our latest blogs and also refer to our COVID FAQ questions which you can access here.
If you have queries in relation to the redundancy process or necessary notice period for your staff our HR Consultants are more than happy to assist you phone 01924 827869 or contact us for more information.
