In brief
- Emergency legislation took effect on 31 July which aims to prevent furloughed employees losing out on statutory redundancy pay.
- The new legislation also applies to other statutory entitlements due on termination of employment.
The Employment Rights Act 1996 (Coronavirus, Calculation of Week’s Pay) Regulations 2020 (SI 2020/814) (the regulations) were made on 29 July and came into effect on 31 July. That was the day before government funding for the wage costs of furloughed staff started to be reduced.
The explanatory notes state that the regulations seek to ensure ‘for the benefit of furloughed employees whose employment is terminated, that the calculation of statutory entitlements relating to termination is based on their normal pay, rather than their furlough pay’. The government was concerned that without these regulations, there might be some circumstances in which a furloughed employee’s statutory entitlements could be calculated at 80% of normal pay, the minimum level of pay guaranteed under the Coronavirus Job Retention Scheme (the scheme).
