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Furloughed Worker's Statutory Redundancy and Notice Pay

Posted On: [10/06/2021]

If you are being made redundant, make sure that your redundancy pay is calculated on your normal unreduced pay, and not your reduced furlough pay. It was unclear whether furloughed workers would be entitled to a statutory redundancy payment based on their normal (unreduced) salary, or whether it would be acceptable to calculate entitlement based on the reduced, furlough rate of pay.

The Government has published the new Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020, which came into effect on 31st  July 2020. Under the new Regulations, all workers will be entitled to statutory redundancy pay calculated on their unreduced normal salary. The statutory cap on a week’s pay will remain in force. The Government says that the new law ensures workers will not be ‘short changed’ because they are furloughed.

The new law will also apply to statutory notice payments and basic awards for unfair dismissal claims, which must also be based on normal wages rather than the reduced, furlough, rate of pay.

Where employers need to make redundancies during furlough leave, the Coronavirus Job Retention Scheme (CJRS) can continue to be used to reclaim notice pay up to the amount of the statutory cap. CJRS cannot be used to pay redundancy payments, which must be financed by your employer.

See also

What to do if you are Not being furloughed and NOT being paid

Answers to Questions about the Coronavirus Furlough Scheme

Being forced to furlough

Coronavirus – Restrictions on Movement and Gatherings

Coronavirus and Employment Restrictions

Sick pay 

Coronavirus and Work – Keeping Safe

Coronavirus Isolation Note

Courts and Tribunals COVID-19 preparation

Employment Tribunal Hearings during COVID-19 outbreak

Pay during Medical Suspension

Suspension on Maternity Grounds

Pregnancy and Maternity protection