Final pay when someone leaves a job

Furlough and notice pay

If the employee leaving has been on furlough during the coronavirus (COVID-19) pandemic, it's important to check their employment contract to confirm if they have either:

  • the legal minimum notice period ('statutory notice period')
  • a notice period that's longer and is written in the contract ('contractual notice period')

From 1 December 2020 until 30 September 2021, the employer could not claim payments from the Coronavirus Job Retention Scheme during the notice period.

If you need help with calculating notice pay, you can contact the Acas helpline.

Statutory notice pay and furlough

If the employee leaving has been on furlough, they may have received reduced pay in the 12 weeks leading up to their statutory notice period.

If they usually work fixed hours, they must be paid their full normal pay while they're on statutory notice, not their reduced furlough rate.

If someone's hours or pay varies

If their hours or pay vary, the employer must top up the pay for any furloughed hours to 100% when calculating notice pay.

Example 1 – someone who usually works variable hours and returned from furlough in the last 12 weeks

An employee who usually works variable hours has been on furlough for the last 12 weeks and is now leaving.

The employer already worked out the employee's average hours and full normal pay when they claimed from the Coronavirus Job Retention Scheme. The employee normally works 30 hours a week on £10 an hour, receiving £300 a week.

They spent 6 weeks on furlough earning 80% pay. When they returned to work, they worked 40 hours a week for 6 weeks, receiving £400 a week.

To work out their weekly pay, the employer adds up the 6 weeks of pay during furlough, at their full normal pay of £300 a week. Then they add up the 6 weeks the employee worked at £400 a week.

The employer adds up these figures and divides by 12 to work out their average weekly pay of £350 a week. This means the employer must pay the employee at least £350 notice pay a week.

Example 2 – someone who usually works variable hours and has been on flexible furlough for the last 12 weeks

An employee who usually works variable hours has been on flexible furlough for the last 12 weeks and is now leaving.

The employer had already worked out the employee's average hours and full normal pay when they claimed from the Coronavirus Job Retention Scheme. The employee normally works 30 hours a week on £10 an hour, receiving £300 a week.

They've been on furlough for half this time. They've been working for 15 hours a week on full pay, receiving £10 an hour. For the remaining 15 hours, they've been on flexible furlough on 80% pay, receiving £8 an hour.

The employer must top up their pay during flexible furlough to 100% when calculating notice pay, so they must receive £300 a week notice pay.

Example 3 – someone who usually works variable hours and has been on furlough for the last 12 weeks

An employee who usually works variable hours has been on furlough for part of the last 12 weeks and is now leaving.

The employer already worked out the employee's average hours and full normal pay when they claimed from the Coronavirus Job Retention Scheme. So the employer already knows the employee works an average of 30 hours a week and gets paid £10 an hour. 

This means the employee must get their full normal pay of £300 a week during their notice period.

Contractual notice pay and furlough

If the employee leaving has a contractual notice period and has been on furlough, the employer should check their contract to see:

  • how long their notice period is
  • how much they should be paid

If the employee has a contractual notice period that's at least 1 week more than their statutory notice would be, their notice pay should be based on what their contract says.

Employees who have returned to work during their notice period must get their full normal pay for any hours they work. The employer must follow the terms of the person's contract.

This can be a complex area. If the employer and employee cannot agree how much the notice pay should be, they may need to get legal advice.