New UK Law Ensures Furloughed Workers Will Receive Full Redundancy Pay

A new U.K. law entitles furloughed workers to receive full redundancy pay.

The pandemic has provided an atmosphere of uncertainty, especially for those working in the hardest-hit industries. Millions of workers have been made redundant, meaning their job positions are closed and they are no longer needed.

Since the beginning of the pandemic, workers have been losing their jobs at an alarming rate, and many have been subject to reduced redundancy pay, receiving only a portion of their wages.

However, a new law under the coronavirus Jobs Retention Scheme has been passed that allows furloughed workers to be entitled to their usual pay, according to Forbes.

Furloughed workers can now count on full redundancy pay as a standard if they have worked at their employers for two sequential years. One hundred percent, full wage redundancy pay packages are now certain for workers who have lost their jobs due to the challenges businesses are facing during the pandemic. 

Previously, furloughed workers were receiving only 80% of their wages. The new law ensures employers will no longer be able to pay furloughed workers a reduced rate.

The law also includes Statutory Notice Pay, Forbes reported.

The Statutory Notice Pay policy states that workers are to be given notice prior to their position being shut down. Before an employee’s job closes, they are entitled to a period of time from at least one week’s notice, up to 12 full weeks of notice, depending on their level of seniority. 

The Statutory Notice Pay entitles employees to be paid as they normally would during the notice period.

Another part of the law provides fundamental awards for improper dismissals, and awards will be established based on full wages not reduced furlough pay. 

Since March, there have been 9.5 million job positions furloughed and those workers received a limited redundancy pay of up to £2,500 monthly, the Guardian reported.

However, some scrupulous employers have decided to continue paying furloughed workers their full wages.

According to a government statement, most businesses have been treating employees fairly, but a small minority have been skirting around paying furloughed workers full redundancy pay.

As the U.K. economy has been recovering at a rate slower than expected, more redundancies are anticipated.

The industries that have been hit the hardest during the coronavirus crisis are expected to produce more redundancies. Leisure, retail and travel companies are amongst the industries struggling the most.

Workers in those positions might become furloughed in the coming months, depending on the ever-changing circumstances. 

According to Britain’s business secretary, Alok Sharma, furloughed workers will not have to face reduced pay during the uncertainty of the pandemic and they are entitled to full redundancy pay.

“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,” Sharma said. “New laws coming into force today 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.” 

Until now, furloughed workers with more than two years with a firm were allotted redundancy pay based on their seniority, but that is no longer the case. 

General secretary Frances O’Grady reported that although redundancies are happening, it is important that firms are trying to avoid them in the first place, according to the Guardian. She says it is better to prevent job losses if possible, to ensure economic recovery in the near future. 

It is important to note the new law does not affect redundancy pay that is designated in the terms and conditions of individual employee contracts. The law applies to employees that have been made redundant, without any previous stipulations in their contracts that have already laid out redundancy terms.

Do you feel comforted knowing redundancy pay is now required to be 100% of an employee’s wages? Let us know in the comments.

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