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Calculating Payments due to Redundant Employees who had been Furloughed

The government has introduced new legislation, which came into force on Friday 31 July 2020, intended to ensure that an employee who has been furloughed and is subsequently made redundant will receive a statutory redundancy payment based on their normal remuneration and not a reduced sum based on a lower “furlough” rate of pay.

The legislation is complicated but in essence, alters the calculation of a week’s pay to mitigate the potentially detrimental impact of furlough on how a week’s pay would ordinarily be calculated. The method of determining a week’s pay depends on various factors such as whether the employee has a fixed wage or salary, whether they have normal working hours or not and whether their pay varies depending on the amount of work done or when the work is performed.

The new legislation also applies to the calculation of other statutory payments linked to a week’s pay such as notice pay.

For specific advice on calculating any payments due to employees who have been made redundant after spending time on furlough please contact a member of our specialist Employment Team directly or click here to send an email.

Posted on August 10, 2020

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