Is redundancy pay based on your usual salary or furlough salary?

Sarah_28

Hi all, 

I have come across so much conflicting advice but hoping someone can make this clear for me please? 

My husband has been on furlough since May 2020, this week he was given notice of his redundancy. 

Should his redundancy pay be based on his Pre-furlough salary or the salary he has received whilst on furlough please? 

His employer’s HR person is saying he will only be paid based on his furlough salary and they are saying this is because there was a ‘variation’ to his contract - he did get notice of variation to contract when he was first furloughed. It doesn’t mention redundancy and mainly says they will pay him 80% of his salary capped at £2500. 

Can anyone shed any light? 

He is going to call ACAS but we are currently on holiday with terrible phone signal.

Jeremy535897

It is a thorny issue. The question is whether his contractual salary was reduced on a permanent basis. If not, a Government change on 31 July 2020 says that pre furlough pay is the correct measure. Try quoting it and see what happens:
https://www.gov.uk/government/news/new-law-to-ensure-furloughed-employees-receive-full-redundancy-payments

Sarah_28

Jeremy535897 said:

It is a thorny issue. The question is whether his contractual salary was reduced on a permanent basis. If not, a Government change on 31 July 2020 says that pre furlough pay is the correct measure. Try quoting it and see what happens:
https://www.gov.uk/government/news/new-law-to-ensure-furloughed-employees-receive-full-redundancy-payments

Thanks for your reply, this is interesting, I’ve forwarded the link to my husband.

Do you know if the pay my husband recieves whilst on the ‘notice period’ should be full pay or furlough pay? 

prowla

AFAIK, furloughed pay is 80% of normal pay.

Therefore it can't be the normal pay...

Jeremy535897

prowla said:

AFAIK, furloughed pay is 80% of normal pay.

Therefore it can't be the normal pay...

Some employers got employees to agree to a permanent reduction in salary to 80%, as opposed to a temporary reduction whilst furloughed, with the consequence that those who worked were paid the same as those on furlough (which was based on pre-reduction figures). Another example is someone going from full time to part time. Furlough continued to be based on the old full time wage, but after 12 weeks part time any redundancy would be based on the part time pay (for those on a regular wage).

Incidentally, there is nothing to stop an employer paying 100% of normal pay to its furloughed staff (although the CJRS claim was capped at 80% originally, and is now 60%).

MattMattMattUK

Jeremy535897 said:

prowla said:

AFAIK, furloughed pay is 80% of normal pay.

Therefore it can't be the normal pay...

Some employers got employees to agree to a permanent reduction in salary to 80%, as opposed to a temporary reduction whilst furloughed, with the consequence that those who worked were paid the same as those on furlough (which was based on pre-reduction figures). Another example is someone going from full time to part time. Furlough continued to be based on the old full time wage, but after 12 weeks part time any redundancy would be based on the part time pay (for those on a regular wage).

Incidentally, there is nothing to stop an employer paying 100% of normal pay to its furloughed staff (although the CJRS claim was capped at 80% originally, and is now 60%).

Everyone I know who was placed on furlough at any point through all this was paid at 100%, from people who earned minimum wages in supermarkets and were shielders, through to people earning six figures. 

Andy_L

Sarah_28 said:

Jeremy535897 said:

It is a thorny issue. The question is whether his contractual salary was reduced on a permanent basis. If not, a Government change on 31 July 2020 says that pre furlough pay is the correct measure. Try quoting it and see what happens:
https://www.gov.uk/government/news/new-law-to-ensure-furloughed-employees-receive-full-redundancy-payments

Thanks for your reply, this is interesting, I’ve forwarded the link to my husband.

Do you know if the pay my husband recieves whilst on the ‘notice period’ should be full pay or furlough pay? 

If it is statutory redundancy pay then, as per Jeremy535897's link,  it must be based on full pay. If it's better than statutory redundancy then it will depend on the contract.
 

Grumpy_chap

Sarah_28 said:

Do you know if the pay my husband recieves whilst on the ‘notice period’ should be full pay or furlough pay? 

So, this directly affected my wife when she was made redundant, though fortunately my wife's employer paid her 100% throughout the furlough period anyway, so to reduce it through the notice period would have been absurd.  Regardless, as far as we could make out the rules were that notice period had to be paid at 100% and that had some rationale:

• Furlough is a job retention scheme - the job is no longer being retained once notice is given.
• Furlough cannot be claimed during the notice period (this was later put into specific rules).
• You cannot be on furlough when on notice - same as holiday was at 100%, not reduced 80%.

The specific rules may have evolved since my wife was made redundant a year ago, but I can't see that the basic logic behind the rules is changed.  You may be able to find the latest rules on .gov.uk