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Regulations detailing furlough and redundancy

Confusion abounds - so what is the law?

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I have read a few recent questions and answers regarding the redundancy of employees while on furlough, but I am concerned that there is a bit of guesswork going on here.

I hold to the maxim that when stuck, it is best to refer directly to the legislation rather than other's interpretations. However, in the case of redundancy of employees while on furlough I cannot find any relevant legislation or regulations. All I have to go on is:

The consensus online seems to be that: i) pay during the notice period is claimable, ii) pay in lieu of notice is not claimable, iii) redundancy pay is to be based on the average weekly earnings prior to furlough, not the reduced average weekly earnings while on furlough.

It is, in particular point iii) that I am struggling with. Where do the regulations say this? As far as I can tell, the long-standing redundancy rules require the redundancy pay to be based on the average last 12 weeks earnings. In what way are those last 12 weeks earnings not in fact at the reduced furlough amount? My interpretation is that the employees contractual pay reduced by 20% when they entered furlough (in exchange for not having to provide labour), Their gross pay for Apr/May/Jun is the reduced amount.

I am really trying to get this right as there is a lot of money at stake for my client (and their employees!), so I would be really grateful if someone could point me in the direction of legislation or regulations that clarify this issue.

Thank you.


Replies (6)

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By meadowsaw227
03rd Jul 2020 09:54

Does furlough pay count as "earnings" .

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Replying to meadowsaw227:
By Hamlin
03rd Jul 2020 10:25

"Gross amount" on the payslip.

How do you enter the payroll cost in the accounts- Enter "full" £1000 as gross pay, then credit the £200 to get £800 furlough pay?

Yes, for pension contributions.

Interesting point - I will consider it further.

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By Matrix
03rd Jul 2020 10:53

I am not sure that the employee’s contractual pay reduced by 20%. I thought full pay still has to be paid for holiday, redundancy and notice so if full pay equalled reduced furlough pay then this wouldn’t have been an issue.

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By lesley.barnes
03rd Jul 2020 10:58

Insolvancy website for employees that are applying to for redundancy pay after furlough dated 3rd June 2020 says ..
"4. Rate of pay
When you apply for redundancy pay you will be asked about your rate of pay. Rate of pay is based on your weekly pay and is what we use to calculate your payments.

Find out how we calculate your rate of pay if you weren’t paid weekly.

Please provide your pre-furlough salary, rather than the reduced salary you may have earned while you were furloughed.

We will calculate most of your payments based on your full salary rather than your earnings during furlough."

This suggests it's pay before furlough rather than during furough.

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Replying to lesley.barnes:
By accountantccole
03rd Jul 2020 13:33
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