31st July 2020
The Government has closed a loophole which enabled employers to make furloughed staff redundant on reduced pay under the job retention scheme.
The new law kicked in on 31 July 2020 to ensure furloughed workers who are made redundant receive redundancy pay based on their normal wage.
Employees who are made redundant after more than two years of continuous service are usually entitled to a statutory redundancy payment.
This payout is based on their length of service, age and pay, up to a statutory maximum.
But many of the UK's 9.5 million furloughed workers are being paid at 80% of their normal wage, which led a minority of employers to reduce payouts.
Alok Sharma, Business Secretary, said:
"Where redundancies are unavoidable, it is important that employees receive the payments they are rightly entitled to.
"These new laws 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."
The new law extends to statutory notice pay, which ensures workers are given a notice period before their employment ends.
In addition, basic awards for cases of unfair dismissal must be based on full pay rather than reduced wages through the furlough scheme.
Talk to us about termination payments.