Protection of statutory notice and redundancy pay for employees
The Employment Rights Act (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 (the Regulations) came into effect on 31st July 2020. The Regulations only apply to payments made after that date, and to payments to those who have been furloughed.
The purpose of the Regulations is to protect statutory entitlements for employees who have been placed on furlough or flexible furlough and ensure they are receiving their full entitlements on termination, rather than the reduced furlough rate. The Regulations achieve this by effectively ignoring the impact of furlough on an employee’s normal weekly pay.
Specifically, the Regulations provide where an employee is entitled to minimum statutory notice pay they must be paid their pre-furlough rate of pay during statutory notice.
An employer can pay a reduced furlough rate throughout notice only where an employee on reduced furlough pay is not eligible for minimum statutory notice pay under the relevant legislation, which will be the case if the employee’s contractual notice period exceeds the statutory minimum (one week per year of service up to a maximum of 12 weeks) by at least one week.
In terms of statutory redundancy payments, where the notice of termination expires on or after 31 July, the Regulations mean that any entitlement must be calculated using an employee’s normal pre-furlough wages, rather than any reduced furlough rate.
There is a lot of detail in the Regulations including in relation to those with no normal working hours so if you are in doubt about the correct rate to use, please do give us a call.Back to news list