Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, with reference to the Coronavirus Job Retention Scheme, whether employers are required to calculate statutory redundancy pay based on an employee's pay (a) when furloughed or (b) before the furlough period began.

Any redundancy process should be fair and reasonable, with appropriate equalities considerations.

The provisions relating to calculation of a week’s pay under the Employment Rights Act continue to apply when an individual is on the Coronavirus Job Retention Scheme. This will usually mean that employees whose contract contains standard working hours, where pay does not vary by the amount of work done, would receive their normal statutory redundancy pay as at the date of termination of employment.

For employees whose pay varies weekly, Statutory Redundancy Pay is taken as an average over the 12-week period prior to the date of termination, discounting weeks where there was no pay because there was no work. In most cases the furlough period should be discounted for the purposes of calculating redundancy payments because the calculation of average pay under the Employment Rights Act 1996 is based on hours worked, rather than periods such as furlough, where no work is done.

During this difficult period, we urge employers to exercise discretion and not use the Job Retention Scheme to make someone redundant on less favourable terms than they would otherwise have received.