New law protects redundancy pay for some furloughed workers

Only those who are classed as an 'employee' and have been with the same employer for more than two years will be entitled to the new protection.

31 Jul 2020| News

The government yesterday (Thursday 30, July) brought in a new law to ensure furloughed workers that are made redundant have their redundancy pay calculated according to their normal wage and not that received during the Covid-19 crisis.

As Statutory Redundancy Pay is only provided to employees with more than two years’ continuous service, this law will only protect those who fall into that category and not workers on insecure contracts or those who have been working for the same employer for less than two years.

With estimates that unemployment could reach six million as swathes of workers are laid off, and signs that pregnant women are already being disproprortionately targeted, the new law may disappoint many of those who find themselves out of work during the deepest recession the UK has seen in decades.

What could they have done?

At the Institute of Employment Rights, we work hard to provide evidence-based alternatives for policymakers, which are formulated by our wide network of leading academics, lawyers and campaigners.

On redundancy law, we propose:

  • Give everyone the same rights from day one: Abolish the three-tiered employment status system that categorises those in insecure work as a ‘worker’ rather than an ’employee’, thereby removing their right to statutory redundancy pay. Instead, all people in employment should be classified as a ‘worker’ with a right to redundancy pay and this right should begin for their first day on the job or after a reasonable probation period.
  • Increase the notice period workers are entitled to when being laid off. Currently a worker that has been with their employer for up to two years is only entitled to one week’s notice. Further, restore the 90-day period workers are afforded for consultation with employers regarding the details of mass redundancies, which has recently been cut to 45 days.
  • Increase statutory notice pay. Those who have been with their employer for up to two years or are classed as a ‘worker’ rather than an ’employee’ are entitled to nothing. Even those that have worked for their employer for over two years are eligible for as little as half a week’s pay for each full year they worked if they are aged under 22, or one week’s pay for each full year they worked between the ages of 22 and 41.
  • Allow workers to negotiate better terms with their employers. By strenghtening trade union rights and reinstating sectoral collective bargaining – in which minimum terms and conditions are agreed at industry level – workers have the opportunity to build on statutory minimums in order to receive a fair share according to their contribution to said industry.