New law protects furloughed workers statutory redundancy payments

In a recently released Employer Bulletin published on Gov.uk an update from the Department for Business, Energy and Industrial Strategy was released.

The update details the introduction of legislation which will protect furloughed workers rights to statutory redundancy pay, notice pay and compensation for unfair dismissal. Whilst the goal of the Government is to reduce the need for as many redundancies as possible, measures have been set out to ensure the fair treatment of workers who find themselves in the situation where their employment is being terminated.

What does the legislation dictate?

The legislation dictates that in situations where furloughed workers are receiving statutory redundancy pay, notice pay or compensation for unfair dismissal that the calculation of the payment is based on their full wages; not the 80% which has been supported by the Government under the Coronavirus Job Retention Scheme (CJRS).

What other protection is in place for furloughed employees?

This update is just the latest in a string of moves made by the Government to protect furloughed workers and secure people’s jobs as the UK battles the impact of the ongoing Coronavirus pandemic on the economy.

There have been two other significant announcements that affect furloughed workers including the Job Retention Bonus and the fact that furlough payments cannot be used to fund statutory redundancy, contractual redundancy or pay in lieu of notice (PILON) payments.

Job Retention Bonus

In an effort to encourage employers to keep on their furloughed workers rather than making them redundant, a one off £1,000 payment called the Job Retention Bonus has been announced.

As we detailed in our recent blog post “Latest on the Job Retention Bonus – how will it work?” the incentive will be available to employers for every employee that had previously been successfully claimed for under the CJRS providing they were employed through to the 31st of January 2021 and all of the other eligibility criteria has been met.

The bonus, which will begin to be paid from February 2021, will be available for employees where the following conditions have been met:

• The employee has earned at least £520 a month between 1st November 2020 and 31st January 2021
• The employee has been previously furloughed with a successful CJRS claim
• The employee has been continuously employed to at least the 31st January 2021
• RTI records are up to the date for the period to January
• The employee is not serving a statutory or contractual notice for the claiming employer before the 1st February 2021

For an employer to claim they must:

• Have a UK bank account
• Have maintained online PAYE enrolment
• Have filed and paid PAYE accurately and on time under RTI

Furlough payments cannot fund redundancy

Another clarification stated that furlough payments provided by the Government cannot be used to fund statutory redundancy, contractual redundancy or PILON payments.

Since the CJRS and the process of furlough leave was intended to support the economy through the Coronavirus crisis and secure worker’s jobs, it is no surprise that this clarification has been issued. As the UK continues to ease out of lockdown and return to work, we expect that further advice will be released.