Incorrect furlough payment

Jeremy535897

The Treasury Direction required to implement CJRS has now been put in place. See:
https://www.gov.uk/government/publications/treasury-direction-made-under-sections-71-and-76-of-the-coronavirus-act-2020

calcotti

Jeremy535897 said:

The Treasury Direction required to implement CJRS has now been put in place. See:
https://www.gov.uk/government/publications/treasury-direction-made-under-sections-71-and-76-of-the-coronavirus-act-2020

And if anyone can work out what that means with reference to the subject of overtime they're doing better than me.

Jeremy535897

calcotti said:

Jeremy535897 said:

The Treasury Direction required to implement CJRS has now been put in place. See:
https://www.gov.uk/government/publications/treasury-direction-made-under-sections-71-and-76-of-the-coronavirus-act-2020

And if anyone can work out what that means with reference to the subject of overtime they're doing better than me.

It is not easy reading. My take on it is that if you get paid every month for the hours you work, you are not a fixed rate employee unless your hours don't vary. Paragraph 7.6(e) says that to be a fixed rate employee (amongst other conditions):
"the person is entitled under their contract to be paid, where practicable and regardless of the number of hours actually worked in a particular week or month in equal weekly, multiple of weeks or monthly instalments (“the salary period”),"
If you are not a fixed rate employee, you use the variable pay method we are all familiar with.

I accept I could be totally wrong.

EssJayD

Im only up to page 5 and already my head hurts......

nick74

We've had confirmation back from our employment law advisers, and it appears my view (and the OP's) is correct. Past overtime should be included, even if the employee receives a fixed basic salary.

The definition of 'Employees whose pay varies' is causing a lot of confusion but it should apparently be interpreted in very simple terms as someone who's taxable pay fluctuates from one pay period to another. It doesn't matter why it fluctuates, it could be due to overtime, compulsary commission, piecework, variable hours on zero hours contract. The key thing the pay on their payslip must go up and down throughout the year, in which case you take a 12 month average, or take the equivalent month from last year if the pay was higher. The only exceptions are those specifically mentioned as excluded in the guidance such discretionary bonus, tips and commission.

EssJayD

Ah ok so it's not just past overtime owed.  Good news for a lot of people!

And it does appear that they are talking in accounting rather than EL/generally accepted HR terminology.  Should have been obvious really with it being HMRC  shows why there has been a lot of confusion though.

unholyangel

This is what has been published so far, seems perfectly clear to me that a lot of employers & employees are going to be disappointed:

7.6 A person is a fixed rate employee if-
(a) the person is an employee or treated as an employee for the purposes of CJRS by virtue of paragraph 13.3(a) (member of a limited liability partnership),
(b) the person is entitled under their contract to be paid an annual salary,
(c) the person is entitled under their contract to be paid that salary in respect of a number of hours in a year whether those hours are specified in or ascertained in accordance with their contract (“the basic hours”),
(d) the person is not entitled under their contract to a payment in respect of the basic hours other than an annual salary,
(e) the person is entitled under their contract to be paid, where practicable and regardless of the number of hours actually worked in a particular week or month in equal weekly, multiple of weeks or monthly instalments (“the salary period”), and
(f) the basic hours worked in a salary period do not normally vary according to business, economic or agricultural seasonal considerations.

Galloglass

Anyway, we've now put this question to our employment law advisers so I'll report back when I've had a reply.

Will the advisers compensate for the monies you don't collect if they are wrong in retrospect? Or will the charge a second time to try to defend their incorrect advice?

nick74

But then here https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme#include   We have:

Choose the calculation you think best fits the way your employee is paid. For example, if you pay your employee a regular salary, use the calculation for fixed pay amounts. HMRC will not decline or seek repayment of any grant based solely on the particular choice of pay calculation, as long as a reasonable choice of approach is made.

Which suggests they aren't going to enforce the definition of 'fixed rate employee' too rigorously anyway?.. It will be interesting to see what the online calculator says when it's launched next week

sharpe106

I am sure if someone hit the wrong button on the calculator they won't care, it be more for ones that are tying to fiddle the figures in some way.