Furlough Payment

simjac12

Need some advice . My wife hasn’t received her furlough payment yet, it’s due shortly but we’ve found out her employer hasn’t used any of the 3 options available To him
1: previous month to first being furloughed
2: same month the previous year
3: 2019/20 tax year.
instead he has said he was going to reduce her hours in April which is the first my wife has heard and used this figure as the furlough reference payment. This figure is a lot less than any of the 3 options. CAN HE DO THIS ?

Jeremy535897

Your assumption about the options available are not entirely correct. Firstly, your wife has to agree to be furloughed, and agree to a temporary reduction in pay (assuming her contract of employment does not allow her employer to do this unilaterally, which would be very unusual). The employer must then ensure he pays your wife at least 80% of her "reference salary" (or £2,500 a month if lower), or he will not be entitled to claim for her wages under the CJRS.

Her reference salary will depend on whether she is a fixed rate employee or a variable pay employee. If she is a fixed rate employee, her reference salary is set at the amount she was paid for the last pay period ending before 19 March 2020. If she is a variable pay employee, her reference salary is set at the higher of your options 2 and 3. The guidance says:

"How your monthly wages are calculated

If you are a full-time or part-time employee on a salary, then your monthly wages are based on your salary. You should speak to your employer for further information about how they will calculate this.

If your pay varies and you’ve been employed (or engaged by an employment business in the case of agency workers) for a full year, employers will claim for the higher of either:

• the amount you earned in the same month last year
• an average of your monthly earnings from the last year

If your pay varies and you’ve been employed for less than a year, employers will claim for an average of your regular monthly wages since you started work.

If you have been working for less than a month, your employer will pro-rata your earnings from that month."

simjac12

Thanks for the response. My wife has worked there for 5 years on a part time basis but always works 19 hours per week. He has subsequently said he was going to reduce her hours to 12 hours per week starting in April. This hadnt  been mentioned before hand and she knew nothing about it. So he has said he used the new 12 hours per week instead of the 19. Surely this is wrong?

Jeremy535897

Whether he is entitled to reduce your wife's hours to 12 without agreement will depend on her contract of employment, but it doesn't affect how to calculate her reference salary, which I have explained above. Those calculations take no account of any changes to hours or rates of pay in April 2020.

simjac12

Very informative. Much appreciated