Furlough | New redundancy pay rules 'go some way to cushion the blow'

New redundancy pay rules 'go some way to cushion the blow'

The UK Government has introduced a new law to ensure that furloughed staff members receive statutory redundancy pay based on their normal salary, rather than a reduced amount based on furlough pay.

The new changes – which came into effect on July 30, 2020 – will mean that those placed on the Coronavirus Job Retention Scheme (CJRS) won’t be ‘short-changed’ if they are made redundant, according to Gov.uk.

In addition, the legislation will also ensure that notice pay is based on normal wages rather than wages under the CJRS.

Jon Heuvel, Employment Partner at law firm Shakespeare Martineau, told HR Grapevine that although the new law won’t offer further protection for jobs, he said “they do go some way to cushion the blow of redundancy and ensure workers are treated fairly”.

Whilst Heuvel’s initial response to the news is positive, he warned that certain ‘grey areas’ in the new legislation could lead to complications for employees.

“With some grey areas around the legislation, it remains to be seen whether the measures will go far enough to protect workers in the long run. As always, the devil is in the detail, especially where employees are receiving a variable payment each month, rather than a fixed salary,” he said.

Throughout the pandemic, the Government has implored businesses to ‘do right by their employees’ and stave off redundancies for as long as possible.

Chancellor Rishi Sunak unveiled a host of resources for businesses such as loans, grants, as well as the CJRS furlough scheme, yet these measures seemingly were not enough to prevent the widespread redundancies that the UK has experienced as the coronavirus pandemic has progressed.

“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,” Business Secretary, Alok Sharma, said in a statement published to the Government’s website.

“New laws coming into force [on July 30, 2020] will ensure furloughed workers are not short-changed if they are ever made redundant – providing some reassurance for workers and their families during this challenging time,” he added.

However, Heuvel was more critical of the approach. “The new rules won’t be the golden parachute many were hoping for, but they are a step in the right direction,” he concluded.

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