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New legislation has come into force today, ensuring furloughed employees that are made redundant receive redundancy pay based on their normal wage, rather than a reduced furlough rate.

The changes mean that those furloughed under the Coronavirus Job Retention Scheme will not be “short-changed” if they are made redundant, says the Business Secretary.

As of 26 July, it is estimated that approximately 9.5 million jobs from 1.2 million different employers were furloughed in the UK as part of the government’s job retention scheme.

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Under the scheme, the government has covered 80 per cent of an employees’ usual monthly wage, capped at £2,500 per month.

The scheme will be wound down in the coming months, however, increasing the amount employers will have to contribute towards the wages of furloughed employees.

Experts have warned that redundancies will rise as the scheme comes to an end, with the National Institute of Economic and Social Research suggesting earlier this week that a total 1.2 million people in Britain could be unemployed by the end of the year.

Business Secretary Alok Sharma said: “We urge employers to do everything they can to avoid making redundancies, but where this is unavoidable it is important that employees receive the payments they are rightly entitled to.

“New laws coming into force today (30 July) will ensure furloughed workers are not short-changed if they are ever made redundant – providing some reassurance for workers and their families during this challenging time.”

The government highlighted that the new law will tackle what it called a “minority of businesses” not paying the full redundancy pay.

In addition, the changes will also apply to statutory notice pay – where employees must be given a notice period before their employment ends, varying from at least one week’s notice up to 12 weeks’ notice, depending on how long they have worked for their employer.

During this notice period, employees must be paid and the new law will also ensure that notice pay is based on normal wages, rather than their wages under the retention scheme.

Other changes coming into force will ensure basic awards for unfair dismissal cases are based on full pay rather than wages under the jobs retention scheme.

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