Furlough pay calculation

linzlou

Is travel time included in gross pay for working out 80% of pay? If the employee has to travel every day, no working from home?

**note, this is not a claim for travel expenses it's part wages. Is furlough pay 80% of what you usually earn?

poppy12345

80% pay? is the employee being furloughed? If so then there won't be any travel expenses because they shouldn't be working at all for the employer that's furloughing them.

linzlou

Yes furloughed but travel is not paid as an expense or claimed for as an expense.  I get where you are coming from but I understood from previous posts that I know can't find, that the 80% furloughed pay is based on 80% of what you usually earn? Dropping the travel time pay & 20% of basic is a big drop 

Jeremy535897

I think you are saying that the employee is paid a salary plus an extra amount described as payment for "travel time". The amount is not deductible as an expense by the employee. PAYE is based on the salary plus the payment for travel time? If so, then if the salary and travel time payment are the same each month, the employee is a fixed rate employee, and if the employer has a contractual obligation to pay the travel time element, it should form part of the reference salary. If the amounts vary month by month, the variable pay method will be used, and the decision on whether to include the travel time payment will again depend on contractual entitlement.

The fact that the travel is not actually done is irrelevant. Overtime is included when there is a contractual obligation to pay it, and by definition a furloughed employee can do no overtime.

sliphi

linzlou said:

Is travel time included in gross pay for working out 80% of pay? If the employee has to travel every day, no working from home?

**note, this is not a claim for travel expenses it's part wages. Is furlough pay 80% of what you usually earn?

Travel time is usually just another term for overtime, but may be paid at a different rate to overtime (e.g. often at a lower premium to overtime)

I would suggest the employer uses the same guidance as applies to overtime.

linzlou

Thanks that's what I was trying to say. The amount does vary so the variable payment could be used. So now, does anyone have any ideas how to prove this?  Employer doesn't think it should be included & is only offering furloughed pay at 80% of basic.  Don't want to " rock the boat" & start an argument!

Jeremy535897

The guidance at https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme discusses how to work out pay. Substitute "travel time" for "overtime" in the section on what to include when calculating wages. For proof you have to read the Treasury Directive:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf
They will need to understand paragraphs 7.1 to 7.6. You could point out that under paragraph 7.1(b)(ii) (for employees who will receive less than the maximum of £2,500) if the employer pays a furloughed employee less than the amount that should be claimed for them under CJRS, that claim (for that employee) will fail in its entirety. HMRC say they will accept calculations that are wrong, if they could reasonably have been arrived at, but they are taking a risk in paying and claiming too little.

linzlou

Thanks Jeremy535897 I really appreciate your help & advice. Take care

Jeremy535897

I hope you are successful in persuading them to adopt the correct approach. You are only helping them avoid a potential trap, after all! Just beware they don't decide it's all too complicated and make everyone redundant.

linzlou

Yes that is a concern. They are adamant they have looked at this correctly so pushing too much could give a negative reaction.  Something no one needs right now.