Final pay when someone leaves a job

Furlough and notice pay

Furlough and statutory notice pay

If the employee leaving has been on 'furlough' during the coronavirus (COVID-19) pandemic, 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. 

From 1 December 2020, the employer cannot claim payments from HMRC’s Coronavirus Job Retention Scheme during the notice period.

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 has been on furlough for 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 HMRC’s 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.

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 HMRC's 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 returned from furlough in the last 12 weeks and is working more hours than usual

An employee who usually works variable hours has been on furlough for part of 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 HMRC's 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.

For more advice on how to calculate notice pay, you can contact the Acas helpline.

Furlough and contractual notice pay

If the employee leaving has a contractual notice period and is or has been on furlough during the coronavirus pandemic, the employer should check their contract to see how long their notice period is.

If the employee has a contractual notice period (at least 1 week more than their statutory notice would be), they will not get statutory notice pay.

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.

For example, if an employee has worked for their employer for 3 years, they're entitled to at least 3 weeks' statutory notice. But if their contract states their notice period is at least 6 weeks, they will not be entitled to statutory notice pay. They'll get their full normal pay for any hours they work.

If employees are still on furlough during their notice period, the employer should check their contract to find out what pay they're entitled to.