New law to ensure furloughed employees receive full redundancy payments

Government brings in law to ensure furloughed employees receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate.

Workers with more than two years continuous service who are made redundant are usually entitled to a statutory redundancy payment that is based on 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.

This legislation, which will come into force from tomorrow (Friday 31 July), will ensure that employees who are furloughed receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate.

Business Secretary Alok Sharma said: «The government is doing everything it can to protect people’s incomes through our Coronavirus Job Retention Scheme, which is now supporting over 9 million jobs across the UK.

We urge employers to do everything they can to avoid making redundancies, but where this is unavoidable it is important that employees receive the payments they are rightly entitled to.»