Monthly Payslip with Furlough under 80% of usual monthly salary

Lewis1000

Hello there,

This is a bit of a complicated situation, but I thought I would post to see if anyone had any insight regarding a scenario I have come across with a first payslip since furlough.

Question:

An employer has furloughed an employee part-way through a month. By way of an example, the employee is on an annual salary of £12,000 per annum and gets paid a fixed amount each month (£1,000) which does not change. In this instance the final working day before furlough was Friday 1st May. According to the employer, Furlough payment commenced on Monday 4th May 2020.

The employer has provided a payslip detailing the following:
Basic Pay: 1 day of pay calculated based on 260 working days per year from 1-3 May (Calculation: £12,000/260 days X 1 day = £46.15)

Furlough Pay at 80%: Pay based on 28 days in the calendar month (4 May - 31 May) (Calculation: £1,000/31 days x 28 days x 0.8 = £722.58)
Total pay: £46.15 + £722.58 = £768.73 (76.87% of the usual monthly pay)

As a result of using two different calculations (i.e. using a calculation based on working days for the period 1-3 May, and then a separate calculation using calendar days for the period 4 May - 31 May, the total monthly salary for the period 1 May - 31 May is less than 80% of the normal gross salary. It actually comes to 76.87%.

The furlough pay for 4 May - 31 May appears to be correct at 80%, however as the company has only calculated 1 day pay from 1-3 May, the total monthly salary they have calculated is lower than 80%. This appears to have financially disadvantaged the employee and financially advantaged the employer.

Can the company pay less than 80% to the employee for the month in this scenario?
Should the Furlough commencement period have actually been from 2 May 2020 to include the weekend of 3/4th May?
Would there be any recourse to go to ACAS for example, if the employer does not believe they have done anything wrong?

Any help or insight would be greatly appreciated!

sharpe106

Even though you see a flat pay each month your pay would still have been calculated as hourly at some point. They are just giving you it in equal payments. Some months you will work more hours than you do another month, due to days in months and when the weekends are.  

 Without knowing the hours and working days missed even if the calculation was incorrect I doubt the company gained anything.

jimkelly

In your example, the employee's furlough did not start until the Monday, therefore they should have been paid as normal for the first 3 days of the month.  The fact that two of these days were a weekend and said employee may not usually work weekends is neither here nor there.  If they're paid £1000 per month, then for the sake of calculating furlough, the first 3 days in your example should definitely be counted as 100% pay.

If you look on gov.uk, there is a factsheet for employers to show how to work out the 80% and in my experience, there is no where in that where annual number of working days (i.e. 260) is mentioned.  That is complete nonsense and the employer is trying to pull a fast one.

The employer is certainly in the wrong and profiting (illegally) from calculating like this.  How much of a fuss you want to kick up at the present time would depend on the relationship with between the two parties.

mobilejo

sharpe106 said:

Even though you see a flat pay each month your pay would still have been calculated as hourly at some point. They are just giving you it in equal payments. Some months you will work more hours than you do another month, due to days in months and when the weekends are.  

 Without knowing the hours and working days missed even if the calculation was incorrect I doubt the company gained anything. 

This is the wrong answer.

In your example, the employee's furlough did not start until the Monday, therefore they should have been paid as normal for the first 3 days of the month.  The fact that two of these days were a weekend and said employee may not usually work weekends is neither here nor there.  If they're paid £1000 per month, then for the sake of calculating furlough, the first 3 days in your example should definitely be counted as 100% pay.

If you look on gov.uk, there is a factsheet for employers to show how to work out the 80% and in my experience, there is no where in that where annual number of working days (i.e. 260) is mentioned.  That is complete nonsense and the employer is trying to pull a fast one.

The employer is certainly in the wrong and profiting (illegally) from calculating like this.  How much of a fuss you want to kick up at the present time would depend on the relationship with between the two parties.

This is correct.

Lewis1000

jimkelly said:

In your example, the employee's furlough did not start until the Monday, therefore they should have been paid as normal for the first 3 days of the month.  The fact that two of these days were a weekend and said employee may not usually work weekends is neither here nor there.  If they're paid £1000 per month, then for the sake of calculating furlough, the first 3 days in your example should definitely be counted as 100% pay.

If you look on gov.uk, there is a factsheet for employers to show how to work out the 80% and in my experience, there is no where in that where annual number of working days (i.e. 260) is mentioned.  That is complete nonsense and the employer is trying to pull a fast one.

The employer is certainly in the wrong and profiting (illegally) from calculating like this.  How much of a fuss you want to kick up at the present time would depend on the relationship with between the two parties.

Thank you very much for your response - much appreciated. This is also my understanding of how this should have been calculated.

Grumpy_chap

It is also worth looking at any past record of how the employer calculates daily pay, e.g. if ever done for sickness, unpaid leave or overtime.  Often this will be stated in the contract or staff handbook.
The type of calculation is not unusual, but 260 days is.  5 days per week x 52 = 260 days.  BUT, deduct from this bank holidays and annual leave, so rather than 260 days, something like 220 days.  £12,000 / 220 = £55 per day (rather than £12,000 / 260 = £46).  You can check on your own contract what number is fair to be in on the "220" days.

Lewis1000

Thank you for your reply.
The employer does calculate pay based on 260 days. I can see that from previous payslips.
I did go on to gov.uk to the Job Retention Scheme Calculator and entered the calculation myself and the calculation confirmed the amount that should be employer funded. For the example I used in my original post, the amount came to was:
£32.25 x 3 days = £96.77
So the Job Retention Scheme Calculator provided a figure of what the employer funded pay should be (£96.77) and this differs from the amount the employer has paid (£46.15). Additionally this also has a corresponding impact on the NI contributions etc.
Thank you for your responses. This has helped a lot and will be nudging the employer to look into this.

jimkelly

I suggest you respectfully ask the employer for a copy of the CJRS paperwork related to your claim.

They don't have to let you see it, but you could make up some excuse that you need a copy of it to claim for x (like pausing a Gym membership or similar).  They have to keep it by law for 6 years, and there's no reason why any decent employer wouldn't/shouldn't let you see it.

If they start getting evasive or won't let you see it, then you've got your answer and they've probably claimed for those 2 extra days, before coming up with this mathematical methodology that just happens to generate such a result.

If they don't count the initial weekend, then why do they count the last weekend?  It's all nonsense and they're hoping that people won't notice / kick up a fuss.  You've rumbled them, well done, keep pushing until you get what you are legally entitled to.

If this is a large firm, those 2 extra days multiplied by dozens/hundreds of employees = thousands of pounds.