New law to ensure furloughed employees receive full redundancy payments

Economy Minister Diane Dodds has announced a new law to ensure that furloughed employees who are made redundant receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate.

Redundancy - furloughed employees.

Employees with more than two 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.

These changes will also ensure that statutory notice pay is based on normal wages rather than their wages under the Coronavirus Job Retention Scheme (CJRS). Statutory notice pay must be paid when employees have been given a notice period before their employment ends, varying from at least one week’s notice up to 12 weeks’ notice.

Other changes will ensure that awards for unfair dismissal cases are based on full pay rather than wages under the CJRS.

Commenting, the Minister said: 

“Covid-19 has had a devastating effect on the global economy and employment market. I am acutely aware an increase in redundancy statistics represent the loss of jobs, careers and certainty for individuals and their families.

“The broad policy objectives of the law introduced today are to provide greater certainty in the calculation of a week’s pay and to ensure that furloughed employees do not lose out and receive their full entitlement based on their normal wages rather than the furlough rate.

“I understand those being made redundant are facing a difficult time so I think it is important that we provide as much reassurance to people as possible that they will receive the full payment they are due.  Due to the need to respond rapidly to the coronavirus situation, there has not been a formal consultation however guidance will be published as soon as possible after the legislation has been made.”

The Minister added: 

“The Department for the Economy’s Careers Service is available to support those who have been redundant by offering free professional and impartial careers information, advice and guidance tailored to individual needs and helping people to explore future training and employment opportunities. Contact details for the Careers Service and information in regards redundancy payments and where to access help are all available on the nidirect website.”

Notes to editors: 

1. The subordinate legislation ensures that various statutory entitlements based on a week's pay and connected with termination of employment are not reduced as a result of an employee being furloughed under the Coronavirus Job Retention Scheme (CJRS). The entitlements are: redundancy pay; notice pay; compensation for unfair dismissal; a payment resulting from failure to provide a written statement of reasons for dismissal; a payment resulting from failure to comply with an order for reinstatement or re-engagement; and remuneration for time off to look for employment or arrange training. It also sets out how a week's pay is to be calculated for the purpose of deciding whether an employee is taken to be on short-time for statutory purposes.
2. This legislation applies to basic statutory redundancy pay entitlements and does not impact upon any enhanced redundancy pay that may be stipulated in the terms and conditions of an employee’s individual employment contact.
3. This new law brings Northern Ireland into line with England, Scotland and Wales where new laws were introduced on the 31 July 2020.
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5. For media enquiries contact the Department for the Economy Press Office at: pressoffice@economy-ni.gov.uk .
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