A WORCESTERSHIRE law firm has warned Furloughed staff whose employment is terminated must receive redundancy payments calculated at 100 per cent of their normal, pre-furlough pay.

The comments from the law firm follow new legislation that came into effect on 31 July that makes it unlawful to base statutory redundancy or notice payments at any reduced furlough rate.

Helena Morrissey, head of employment at Thursfields Solicitors, said: “The government was concerned at reports that some employers had been paying redundancy based on less generous furlough pay, which was 80 per cent of normal pay up to a maximum of £2,500 per month.

“This new law has been introduced to address this issue and to make sure that no-one receives lower redundancy entitlements than they would otherwise have been entitled to simply because they have been furloughed.

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“Therefore, anyone who has been made redundant since 31 July is entitled to receive statutory redundancy payments which are calculated on the basis of their normal pay.

“They would have a potential claim against their employer if their termination payments are based on their furlough rate.”

Ms Morrissey explained that the new law does not affect the entitlements of employees who have not been furloughed as it applies only to furloughed and flexibly furloughed staff, including those who have recently returned from furlough.

She also highlighted that as the new law only came into effect on 31 July 2020 it did not cover redundancy payments already made before that date.

She added: “It is crucial that employers are aware of this new law or else they could face damaging legal action for underpaying employees who are being made redundant.”

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Employees with more than 2 years’ continuous service who are made redundant are usually entitled to a statutory redundancy payment that is based on length of service, age and pay, up to a statutory maximum.

Business Secretary Alok Sharma said: "The government is doing everything it can to protect people’s incomes through our Coronavirus Job Retention Scheme, which is now supporting over 9 million jobs across the UK.

"We urge employers to do everything they can to avoid making redundancies, but where this is unavoidable it is important that employees receive the payments they are rightly entitled to."