Great Britain

Furloughed wages used to calculate redundancy pay due to loophole

FURLOUGHED workers could see redundancy payouts slashed by thousands due to a loophole in the scheme if they're laid off work. 

Employment lawyers say they have received plenty of calls from people whose bosses have tried to pay them less based on their furloughed rate of pay.

⚠️ Read our coronavirus live blog for the latest news & updates

The government told The Sun firms shouldn't exploit the scheme, but there is nothing explicit in the rules stopping businesses from taking this approach.

Kate Palmer, an employment lawyer at Peninsula UK told The Sun: "We have not had clear government guidance on whether redundancy pay can be based on one’s furlough pay.

"With the increase in redundancies being instigated at this time, no doubt this will be tested in tribunals over the coming months."

How businesses are exploiting the furlough loophole

The government's coronavirus job retention scheme is designed to keep people in work.

The scheme pays workers 80 per cent of their wages when they're unable to work due to coronavirus crisis, up to £2,500 a month.

But sneaky bosses have been using it to pay staff less when they're laid off.

When someone gets made redundant, they usually get notice pay for their remaining time in work and redundancy pay on top.

Both sets of pay are calculated based on your salary or weekly wages.

But bosses have been calculating redundancy based on an employees' lower furlough rate of pay.

For someone earning the average UK salary of £30,420 this would mean losing £507 if you had a one month notice period, or £1,521 over a three-month period.

It would also affect statutory redundancy pay.

In the UK, if you've had a job for over two years, your employers must legally pay you at least:

Redundancy pay is capped at £538 per week, but using the furlough rate means people get even less.

For instance, 80 per cent of the UK average salary of £585 a week is £468.

If someone had worked at the same employer for ten years aged 22 to 32 they would lose £700 based on this salary.

Older workers would lose out on even more.

What to do if your employer tries to pay you less redundancy because of furlough

JODIE Hill, an employment lawyer at Thrive Law explains the steps employees can take if they are made redundant and the business tries to use furlough pay to calculate notice or redundancy pay.

A government spokesperson said: "In the unfortunate event someone is made redundant, they can access the government’s far-reaching package of support including a half billion pound boost to the welfare system."

Jodie Hill, an employment lawyer at Thrive Law adds that employers may think they have a legal case for paying people less.

She said: "On strict interpretation of the law, employers should calculate redundancy pay based on the average of the previous 12 weeks wages."

But as this legislation was written before furlough, she agrees there is a grey area.

And she argues that most people agree to furlough to keep their jobs, not because they are expecting reduced redundancy pay.

She said: "On this basis I believe there will be many employees who... will pursue their employers for the difference in pay in the tribunal.

"Employers should also be wary of adopting this approach as paying the incorrect amount could also be seen as unfair by employees, causing them to challenge the fairness of the entire redundancy.

"Where they have over two years employment this may result in claims of unfair dismissal too."

'Employers should act responsibly'

A government spokesperson told the Sun: "During this difficult time, employers should act responsibly and only use the job retention scheme to protect jobs.

"We would urge employers not to use the job retention scheme to make someone redundant on less favourable terms than they would otherwise have received."

Furlough update: Can your employer make you redundant if it can’t pay your wages?

Can you be made redundant while on the furlough scheme?

What to do if you lose your job or get made redundant due to coronavirus.

Chancellor Rishi Sunak explains the levels of contributions employers will make to govt's coronavirus furlough scheme

CORONAVIRUS CRISIS - STAY IN THE KNOW

Don't miss the latest news and figures - and essential advice for you and your family.

To receive The Sun's Coronavirus newsletter in your inbox every tea time, sign up here.
To follow us on Facebook, simply 'Like' our Coronavirus page.
Get Britain's best-selling newspaper delivered to your smartphone or tablet each day - find out more.

Football news:

Rivaldo: talking about VAR, Barcelona is trying to distract attention from the real problems of the club
Ribery about the robbery: the Fans and Florence to support me. Fiorentina forever!
Vinicius tested negative for the coronavirus. He will be able to play with Alaves
The tournament-the return of MLS-is still a failure. Spend in Florida (7-11 thousand cases per day), players are afraid of the virus and complain about food
Zinedine Zidane: I'm Tired of saying that real have not won anything yet. Ahead of the next final
David Silva: I will miss Manchester City💙
Giovanni Simeone: I Would like to play under my father's guidance. I dream of Atletico