Redundancy and notice pay for furloughed staff: changes from 31 July 2020

UPDATE: The furlough scheme has been extended until 2 December 2020 in view of the new lockdown restrictions in England.   These rules on calculating redundancy and notice pay will likely be amended so that they apply to staff furloughed under the extended scheme.  

From 31 July 2020, there are changes and clarifications to the law on calculating redundancy and notice payments (as well as some other payments) for furloughed employees.

The new regulations are complex but the key points are:

• Where furloughed staff are made redundant and their "calculation date" is prior to or on 31 October 2020, their statutory redundancy pay must be calculated using their pre-furlough pay (if they have normal working hours) or using their furlough scheme reference salary, without the furlough scheme cap (for employees with no normal working hours).  
• The "calculation date" depends whether the employee is given the statutory minimum period of notice.   For employees with variable pay or no normal working hours, the new regulations will apply where the calculation of their redundancy or notice pay would otherwise take into account weeks spent on furlough.
• Similar provisions will also apply to:
  • Calculation of notice pay (for employees whose notice period is the statutory minimum period or no more than 1 week longer than the statutory minimum)
  • Pay for time off to look for new work
  • Compensation for unfair dismissal and some other related claims.