Furlough pay

chestermum

Hi

Hope you’re safe and well! 

I’m furloughed from my part time job. I agreed and the HR department sent out lots of helpful info. I’m paid hourly and it was made clear that the furlough pay would be based on average earnings because I’ve been with the company less than a year. 

I am grateful for getting the furlough pay. However, I have been underpaid and have raised this with HR. They said they have been busy which is understandable because they have a lot of part time workers and they did get us paid one day ahead of payday. The HR manager agreed that I could check with gov.uk and send him my figures, which I did. They have paid me approx 2/3 of what I calculate my furlough pay to be. It’s possible:
1. They made a mistake in payroll and got the correct amount from the government.
2. They made a mistake in claiming from the government. 

If it’s 1 then they have the funds and can pay me later. 

If it’s 2 I’m concerned they will say that’s it and I don’t get the money. I appreciate they didn’t have much time to put in the claim when the portal opened. I’m wondering how I can address it if they say they didn’t get it right in claiming from the government and it’s my tough luck. 

I would appreciate some guidance on how to handle this matter. I know there are a lot of people who are less fortunate. Nevertheless, if the government have made furlough pay available then I hope to get the correct amount. 

Also, to be cynical there’s nothing stopping the company from saying it’s 2. and keeping 1/3 of my furlough pay. The business is temporarily closed and I know they are facing tough times. The government made furlough pay available to help companies with paying staff and the money needs to go where it was intended and not for any other purpose. 

Feedback would be much appreciated. 

And thanks to all the team at MSE for all the information you’ve been kindly sharing! 

Jeremy535897

There is a common misconception here. You are paid according to your contract of employment. What your employer can or does claim under CJRS is irrelevant to that, except that they cannot claim more CJRS than they pay you, and they cannot pay less than 80% of your "reference salary" and claim CJRS.

What seems to be the norm is that employers decide they are going to reduce an employee's pay to what they believe they can claim under CJRS (80% of reference salary), so they pay nothing to keep people furloughed as opposed to making them redundant. That is allowed.

To reduce an employee's pay and furlough them, they amend the contract of employment, probably in the same document as the furlough agreement, and the employee has to approve this. (Contracts of employment that allow employers unilaterally to reduce an employee's pay are unusual.)

Whatever you have agreed to in terms of salary reduction is what you're entitled to be paid when on furlough. If the employer receives less than that when claiming CJRS, that is their problem, unless you agreed that they could recover any shortfall from you, in the paperwork you agreed to above.

So, for the moment, don't second guess what they may or may not have claimed or received from HMRC. Concentrate on whether you have received what you accepted in the paperwork setting out your revised pay during furlough. If that happens to be less than 80% of your reference salary, they should not be able to claim CJRS at all, unless the method they chose to calculate it was reasonable, albeit wrong.

chestermum

Thanks @Jeremy535897 for your helpful reply! I've checked my furlough pay agreement issued on 25/3/2020 and in summary  the relevant key terms state they will pay up to 80% normal wages and that the offer is issued before full guidance from the government and reserve the right to change according to regulations from the government. I thought this was very reasonable and agreed to it.
In a subsequent Q& A document it was stated that furlough pay would be 'average earnings' calculated from months worked. I didn't see the need to challenge this because I'm grateful to get furlough pay. The offer letter did warn of the potential for redundancies even when business re-opens and I can fully understand that.  I'm wondering how the company calculated my 'reference pay'. If they based it on the information they issued in the Q&A document or if reference pay can be any figure that the company chooses even if it's inaccurate based on the guidelines issued by the government and the company itself.
I appreciate your kind help!

Jeremy535897

I didn't go into reference salary as my post was long enough! The first step is to establish whether you are a "fixed rate" employee or a "variable pay" employee. "Fixed rate" is defined, and broadly if you get the same amount every salary payment, you are a "fixed rate" employee. I will say no more as you have been told you are paid on "average earnings", and that means they think you are a variable pay employee.

Here is how you calculate "reference salary" for a variable pay employee who has been employed for less than a year:

"Employees whose pay varies and who started employment after 6 April 2019

If the employee started their employment after 6 April 2019, claim for 80% of their average monthly wages since they started work until the date they are furloughed, up to a maximum of £2500 per month.

To work out 80% of your employee’s average monthly earnings:

1. Start with the amount they earned in the tax year up to the day before they were furloughed.

2. Divide it by the number of days they’ve been employed since the start of the tax year – including non-working days (up to the day before they were furloughed or 5 April 2020 – whichever is earlier).

3. Multiply by the number of furlough days in this pay period.

4. Multiply by 80%.

Every day or period after the employee commenced employment with the employer is counted in making this calculation. This includes days when no work was undertaken.

Example of working out 80% of average monthly wages for the last tax year

Employee started work for A Ltd in 1 May 2019 and was placed on furlough on 23 March 2020, earning £15,000 between 1 May 2019 and 22 March 2020 inclusive. There are 327 days between 1 May 2019 and 22 March 2020. A Ltd is claiming for 23 March to 31 March 2020. There are 9 days between 23 March and 31 March.

1. Start with £15,000 (the amount they earned in the tax year up to the day before they were furloughed)
2. Divide it by 327 (the number of days from the start the tax year, up to the day before they were furloughed)
3. Multiply by 9 (the number of furlough days in this pay period)
4. Multiply by 80% - this is £330.28"

Hope this helps. If you think that you are a "fixed rate" employee, broadly speaking they should pay 80% of your last salary before 19 March 2020.

Confusedfurlough

I'm having the same problem Chester mum. Ring acas and get them to explain the custom of practise to you. They know all about employment law. I'm on a ten hour contract and if any extra hours have become a regular thing and just become the normal thing it can be said that the original Co tract can over riden even if it is not written down. I have worked for my company for 3 years and have worked overtime every week and they have paid me on my contracted hours

chestermum

Thanks @Jeremy535897! I used the formula you quoted and it does come out that my reference salary used by the company is inaccurate. 
@Confusedfurlough thanks for your comments. It's good to know about acas!
Another thing is that on 21 April I got a message from my company that they would start furlough pay from 22nd March and top it up by 20% for March. The agreement had said furlough pay would start from 1 April.
Before furlough was announced, I had asked the company for unpaid leave for the rest of March from around the middle of March because I did not want to go in to do other tasks even though the operations were closed. They had asked us to go in to do training and cleaning.  I didn't want to risk my health.  I thought that the message from 21 April didn't apply to me because I had asked for unpaid leave. They do not appear to have included anything for March, so it looks like they're treating March as unpaid leave. I'm wondering what the furlough rules are for a situation like this. I am grateful to get the furlough pay, and I'm not sure if I am entitled to anything for March because I had asked for unpaid leave, which they agreed to before furlough was announced.
Thank you for all your kind assistance.

Jeremy535897

Guidance says:

"If your employee is on unpaid leave

If an employee started unpaid leave after 28 February 2020, you can put them on furlough instead. If you put them on furlough then you should pay them at least 80% of their regular wages, up to the monthly cap of £2500.

If an employee went on unpaid leave on or before 28 February, you cannot furlough them until the date on which it was agreed they would return from unpaid leave."

Worth asking them.

chestermum

@Jeremy535897 I thank you! Yes, it seems that because I went on unpaid leave I can be furloughed from the latter end of March. I got the documentation from them before the payday. I've left it up to HR manager and Accountant to get back to me. I don't anticipate them being very quick to respond! I also anticipate that I will be made redundant because the business won't need as many staff. The possibility of redundancy is not a big issue. I want to make sure I'm paid accurately based on the furlough scheme. The government instructions which you kindly posted are clear. It's a shame that the people in the office didn't manage to get it calculated right in time. They do have a lot of part-time operatives so I'll put it down to that. I appreciate your kind help!