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Redundancy payments for furloughed workers

View profile for Reyhana Koser
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COVID 19 – Furloughed employees entitled to full redundancy payments

On 30 July 2020, the Government announced a new law which ensures that employees made redundant during furlough will not be financially worse off merely because they have been furloughed.  This law came into effect on 31 July 2020.

The new law seeks to ensure that furloughed employees whose employment is terminated receive redundancy payments calculated at 100% of their normal pay, rather than any reduced furlough rate. 

The government became concerned by some employers paying severance sums based on less generous furlough pay (80% of normal pay, capped at £2,500 per month) and this new law has been introduced to address this issue.

The new law will mainly help those employees who have flexible hours or pay because their redundancy payments are based on an average of their previous 12 weeks’ pay, which will be less if they have been furloughed.

The new law does not affect any entitlements of employees who have not been furloughed. It only applies to furloughed, including flexibly furloughed, employees and those who have recently returned from furlough.

As the regulations came into force on 31 July 2020, any redundancy payments already made before that date will not be covered by the new rules.

If you do find yourself in the unfortunate position of being placed at risk of redundancy, and have a query regarding the process applied or the payments offered, then please contact the Talbots Employment Team by emailing Reyhana Koser or Ellie Robinson-Brady or call us on 0800 118 1500 for more information.

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