Furloughed employees will receive full redundancy payments 31 July 2020
In a press release, the Department for Business, Energy and Industrial Strategy (BEIS) has confirmed that the government is bringing in a law that will ensure that furloughed employees receive statutory redundancy pay based on their standard wages, and not at a potentially lower furlough rate of pay. This will guarantee that those furloughed under the Coronavirus Job Retention Scheme (CJRS) will not receive lower pay in the event that they are made redundant. The amendments are applicable to statutory notice pay and other entitlements. The laws are being brought in from Thursday 30 July, and will come into force from Friday 31 July. The government has encouraged employers to pay any employees being made redundant on the basis of their normal wage, and not based on the reduced rate of furlough pay. There are many businesses that have adhered to this but there are, unfortunately, a minority who have not. The legislation is being brought in to protect workers and to ensure that any employees being made redundant receive the full amount that they are entitled to. Any employees who have over two years’ continuous service, and are made redundant are ordinarily entitled to statutory redundancy payments, which are calculated on the basis of their length of service, age and pay, up to a statutory maximum.
Alok Sharma, Business Secretary, 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.”
The changes are also applicable to Statutory Notice Pay. Statutory Notice Pay is where employees must be provided with a notice period prior to their employment ending. This can vary from between at least one week’s notice all the way up to 12 weeks’ notice, and this will depend on how long they have worked for their employer. Employees must be paid during this notice period. Again, pay must be based on normal wages, and not those paid under the CJRS. Unfair dismissal cases will also be based on full pay and not wages paid under the CJRS.
The statutory instrument can be found here.
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CJRS guidance updated to reflect changes from 1 July 2020 4 August 2020
From 1 July 2020, employers can only claim CJRS for employees who have been furloughed for a minimum of three weeks prior to this date. To reflect this, guidance has now been updated to cement the new eligibility requirements.
In previous guidance, employees needed to have been processed via PAYE and details sent via RTI by 19 March 2020. This requirement has now been removed from guidance. The reason behind this is that the new requirement of being previously furloughed prior to 1 July supersedes this requirement, with those that have returned from a period of family leave or a period as a military reservist being an exception to this rule and can be placed on furlough after this date. Claims for the period of June 2020 need to have been submitted 31 July 2020. From July, there is also no minimum period an employee can be furloughed for, only that each claim period is for a minimum of seven days. Since 1 July, employers have been able to bring employees back in to work on a part-time basis, this is referred to as flexible furlough. Throughout July, employers can claim back 80% of employees wage cost, on furloughed hours, up to the pro-rata cap of £2,500 together with associated employer National Insurance (NI) and pension costs. Another big change from July surrounds the number of employees the employer can claim for in a single claim period. Unlike previous claim periods, from 1 July onwards, the amount the employer can claim must not exceed the maximum number of employees claimed for under any claim made from 1 March through to 30 June.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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