Blog - 04/08/2020
Furlough Leave – Employees to receive redundancy payments in full and more details on Job Retention Bonus
On 31 July 2020, the Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 came into force. On the same day, the Government published further details on the Coronavirus Job Retention Scheme Bonus. This blog considers both updates.
Employees to receive full Redundancy and Notice Pay
Under the new legislation (which can be found here), from 31 July 2020 furloughed employees will be entitled to redundancy payments based on their normal wages, rather than on their furlough rate. This will ensure that employees are not “short-changed” by being paid their redundancy pay entitlement at a reduced furlough rate of 80% of normal pay, capped at £2,500 per month.
The changes will also apply to the calculation of statutory notice pay, as well as other statutory payments including the basic award for unfair dismissal, claims relating to a failure to provide a statement of employment particulars and remuneration for time off to look for employment or arrange training.
As the legislation came into force on 31 July 2020, any redundancy or statutory notice payments already made before that date will not be covered.
Job Retention Bonus
On 31 July 2020, the Government also published further details on the Job Retention Bonus (the Bonus). The full policy paper can be found here, but in summary the major changes and clarifications are as follows.
Employers will be able to claim a £1,000 taxable Bonus for employees who:
- were furloughed and had a Coronavirus Job Retention Scheme claim submitted for them that meets all the relevant eligibility criteria
- have been continuously employed by the relevant employer from the time of the employer’s most recent claim for that employee until at least 31 January 2021
- have been paid an average of at least £520 a month between 1 November 2020 and 31 January 2021. Note that the employee does not have to be paid £520 in each month, but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via RTI
- have up-to-date RTI records for the period to the end of January.
In addition to the above, eligible employees must not be serving a contractual or statutory notice period, that started before 1 February 2021.
Where TUPE applies, a new employer may be eligible to claim the Bonus in respect of employees of a previous business where the transferred employees have been furloughed and successfully claimed for under the Scheme by their new employer. However, an employer will not be eligible for the Bonus in respect of any employee transferred under TUPE after 31 October 2020.
The policy also makes it clear that where a claim for an employee has been incorrectly or fraudulently made, the Bonus will not be paid. Detailed guidance on the Bonus is expected to be published in September.
We will continue to monitor the situation and provide further updates as they become available.
If you have any questions, please contact Linky Trott or any member of the Furlough Advice & Support Team.
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Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
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