One off AVC February, reduced furlough pay massively

Jeremy535897

As I noted, this seems to give a completely unfair result, which is why I thought the gross figure should be used. Others who know more about salary sacrifice disagreed. You could try the argument you have suggested.  I also wonder whether there might be help in paragraph 7.3 of the Direction, which says:
"The following must not be included in the calculation of an employee’s reference salary for the purposes of paragraphs 7.2 and 7.7-
(a) benefits in kind;
(b) anything provided or made available in lieu of a cash payment otherwise payable to the employee (including salary sacrifice schemes);
(c) anything which is not regular salary or wages.
7.4 In paragraph 7.3(c) “regular” in relation to salary or wages means so much of the amount of the salary or wages as-
(a) cannot vary according to a relevant matter except where the variation in the amount arises from a non-discretionary payment (see paragraph 7.19), and
(b) arises from a legally enforceable agreement, understanding, scheme, transaction or series of transactions."

In 7.5, "relevant matters" include:
"7.5 For the purposes of paragraph 7.4(a), the following are relevant matters-
(a) the performance of or any part of any business of the employer or any business of a person connected with the employer;
(b) the contribution made by the employee to the performance of, or any part of any business;
(c) the performance by the employee of any duties of the employment;
(d) any similar considerations or otherwise payable at the discretion of the employer or any other person (such as a gratuity)."

I think it is a very thin argument, as it's talking about receipts, not payments, but it's the best I can think of. Probably the best thing is for the employer to contact HMRC to explain the situation, and ask for their advice.

raijake

Thank Jeremy535897
I have received varying oncall payments every month consistently for the past 10 years (overtime less frequently), I wonder if this would allow the employer to justify using the calculation based on 'employees whose pay varies' and work out an average for the year or the equivalent month in the previous year? 
All else failing, would oncall payments in the above regard not be considered non discretionary and need to be included in the 80% pay calcuation, this could get me to the 2.5k maximum like my colleagues.

Jeremy535897

Your point about such payments making your pay variable is worth raising with your employer, but your second point is also well made. If they believe they must take your February AVC into account, they cannot justify excluding contractual payments for February for overtime or oncall payments.

raijake

My employer has come back to me indicating they have used the following calculation for CJRS...
Annual salary £42k – £24.5k (salary sacrifice) = 17.5k *80% =  £14k /12 = £1,166 JRS per furlough month
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Upon challenging them how they got to 24.5k salary sacrifice (more than half my salary), they have indicated:

My salary sacrifice was based on Februaury where I had a large oneoff AVC, hence 

February Total SS = £2041.66 (AVC) * 12months = £24.5k

Any ideas where I go from here??

Jeremy535897

They are treating you as a fixed rate employee, but annualising the figures. That shows that they don't know what they are doing, but if they are correct in using your February salary net of the AVC, the result is likely to be the same (unless the £42,000 had a pay rise in 2019/20 contained in it). If they want to argue annual figures though, ask them to use the actual figures, not ridiculous hypothetical ones (they know what the actual AVC figure in 2019/20 was).