Business

Stormont amends law around redundancy pay to prevent employers using furlough rates

The legislation brings the north into line with England, Scotland and Wales where new laws were introduced on July 31.
Ryan McAleer

FURLOUGHED workers who lose their jobs will receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate, under a new law announced by Stormont.

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

Statutory notice pay arises when employees are put on a notice period before their employment ends. It can vary from one week to 12 weeks.

Economy Minister Diane Dodds said that the new legal measures will ensure that the statutory pay will be based on pre-lockdown pay, rather than the reduced wages under the Coronavirus Job Retention Scheme (CJRS).

Under the CJRS, the UK Treasury has covered 80 per cent of furloughed employees’ wages, up to a maximum of £2,500 a month. That scheme is being wound down on a month-by-month basis.

It’s expected to result in a surge in the number of people being made redundant.

The Department for the Economy said other legal changes will ensure that awards for unfair dismissal cases are based on full pay rather than wages under the CJRS.

The legislation brings the north into line with England, Scotland and Wales where new laws were introduced on July 31.

“Covid-19 has had a devastating effect on the global economy and employment market,” said Ms Dodds.

“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.”

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