The Government has announced new protection for furloughed workers who are made redundant during their furlough leave.

Until now, there has been some debate as to whether furloughed workers should 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.

Until recently, the Government has urged employers to treat staff fairly, but had stopped short of legislating in respect of redundancy and notice pay.

The Government's announcement demonstrates the need to go further to protect furloughed workers. The Government has published the new Employment Rights Act 1996 (Coronavirus, Calculation of a Week's Pay) Regulations 2020, which came into effect from Friday, July 31.

Under the new regulations, all workers are entitled to statutory redundancy pay calculated based on their unreduced salary. The statutory cap on a week's pay remains in force. The Government has described the new law as ensuring workers will not be 'short changed' because they are furloughed.

The new law also applies 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 can continue to be used to reclaim notice pay up to the cap. As has previously been confirmed, the scheme cannot be used to pay redundancy payments, which must be financed by employers.

  • Michael Delaney is a partner at award-winning law firm VWV, which has offices in Clarendon Road, Watford