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Government issues new laws on how to calculate redundancy and notice payments

September 7, 2020
Employment Law

The Government has taken steps to provide greater clarity on the manner in which statutory redundancy payments and notice monies should be calculated for those employees on furlough.

Doing the right thing?

Over the last few months, we have been working hard to guide our clients through the maze of legal (and sometimes moral) issues facing them as a result of the current coronavirus pandemic. One of the issues requiring our attention has been the question of how you calculate statutory redundancy payments and notice monies for those who have been furloughed since the introduction of the Coronavirus Job Retention Scheme back in March. Should these payments be calculated on the basis of the furlough pay to which employees have been entitled? Or should they be calculated on the basis of pay they would have received in normal time?

Right at the end of July, the Department for Business, Energy and Industrial Strategy rather hurriedly introduced new regulations aimed at confirming that statutory redundancy payments and notice payments for the statutory minimum notice period (roughly a week for each year of service, up to a maximum of 12 weeks) should be calculated on the basis of the employee’s normal full rate of pay. However, as with many of the problems thrown up by COVID-19, the devil is in the detail.

Not as straight forward as all that

Whilst the overall intention of these new regulations is relatively clear, the precise manner in which these laws have been introduced is anything but. So if you are having to consider making redundancies and need to calculate your potential liabilities, please get in touch with us for further advice.

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