There have been many quick decisions made throughout the past few months, many overnight changes and amendments to Coronavirus related regulations. However, a new piece of legislation was announced on 30th July 2020 and came into force the very next day! The Employment Rights Act 1996 (Coronavirus calculation of a week’s pay) Regulations 2020.
This rapid-fire legislation is a new law which intends to ensure that furloughed employees who are made redundant receive statutory redundancy and notice pay based on their ‘pre-furloughed’ rate.
Where pay varies with the amount of time worked or where people have no normal working hours, pay in these circumstances is normally averaged over the previous 12 weeks. This must now be calculated disregarding any reduction in the amount payable as a result of the employee being furloughed. This also applies to contractual notice if this is not at least one week more than the statutory minimum.
Throughout the pandemic, the government has urged businesses to pay those being made redundant based on their normal wage, rather than their furlough pay, which is often less. The majority of businesses have done so, however, there is a minority who have not. From the 31st July 2020, the decision no longer lies with the employer.
The new regulations also protect employees’ pre-furlough position in respect of other claims where the calculation of a week’s pay is relevant, such as unfair dismissal basic awards.
The new rules do not preclude employers paying a lower rate of pay for contractual notice periods which exceed the statutory minimum by at least one week. The total effect is therefore likely to be modest but could still mean a lot to individuals who are about to be made redundant. Or, for that matter to employers for whom every penny counts during this difficult time.
If you require any specific advice around this area of law you can contact us directly on [email protected] for a free confidential chat.