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Regulations require employers to use furloughed employees’ normal pay to calculate statutory payments

Makbool Javaid, Partner - Simons Muirhead & Burton

The Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 came into force on 31 July 2020 to ensure that furloughed employees whose employment is terminated have the calculation of their statutory entitlements relating to termination based on their normal pay, rather than their reduced furlough pay. The Regulations set out how a week’s pay is to be calculated in the case of an employee who has been furloughed under the Coronavirus Job Retention Scheme, for the purposes of calculating any of the following payments they are entitled to: (a) statutory remuneration for time off to look for employment or arrange training; having been notified of redundancy; (b) statutory notice payment; (c) a statutory sum resulting from a failure to provide a written statement of reasons for dismissal; (d) a statutory sum resulting from a failure to comply with an order for reinstatement or re-engagement; (e) any statutory compensation for unfair dismissal; (f) a statutory redundancy payment. The Regulations also set out how a week’s pay is to be calculated depending upon the  employee’s circumstances, i.e. normal working hours that do not vary, where pay varies according to work done, where hours differ from week to week and where there are no normal working hours.

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