Furlough Holiday Pay National Minimum wage increase

Wizawaz

Hi
I have been furloughed since March my wage has been calculated on £8.21 national minimum wage.
There was a minimum wage increase April 2020 to £8.72.
I understand that my wage was frozen before the NMW increase therefore I have been receiving 80% of £8.21 I totally get that part.

However my work has forced me to have 3 weeks of my holiday entitlement (which is from April 2020 to March 2021) and has calculated the holiday pay at £8.21
On the Acas website it says; The amount of pay that a worker receives for the holiday they take depends on the number of hours they work and how they are paid for those hours. The principle is that pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work and working. Holiday pay, whether the worker is on furlough or not, should be calculated in line with current legislation - see the standard guidance, based on a worker’s usual earnings. The underlying principle is that a worker should not be financially worse off through taking holiday. Where a worker has regular hours and pay, their holiday pay would be calculated based on these hours. If they have variable hours or pay, their holiday pay is calculated as an average of the previous 52-weeks of remuneration excluding weeks in which there was no remuneration.
Surely this means that my holiday pay should be calculated on the new NMW £8.72
I have emailed my work to query this and they replied with;
National minimum wage (NMW) needs to be paid for all hours that am employees actually works.This is why paying furloughed staff 80% of their wages is allowed, even if this takes an employees pay to below NMW. The recent increase in NMW is not taken into consideration for calculating furlough pay, as furlough pay is based on people's past earnings which would have been before NMW increased. (Under the governments furlough rules sadly no pay rises can be awarded to any person whilst on furlough.)
Using the same method as above, holiday pay for employees is based on their average pay and average hours worked from the past 52 weeks, excluding any whole weeks in which they didn't work. Therefore, holiday pay entitlement is based on the average pay for the 52 weeks worked prior to being furloughed, which would have been paid at the previous NMW rate.
It just isn't clear enough. I have contacted Acas and they aren't sure either in fact have suggested that I contact an employment solicitor. I was wondering if any of you can provide me with a clearer understanding. I kinda feel ripped off!
Kind Regards

sharpe106

Personally I think the holiday pay should be based on your new pay. My suggestion would have been to contact acas as they said to contact solicitor not much else you can do. But is it really worth contacting a solicitor? 50p an hour for 40 hours a week is £20 so 3 weeks is £60 after tax etc not a lot.  

diggingdude

I think they are talking crap and it should be new rate though I have no evidence for that 

Wizawaz

I know it doesn't sound alot £60 but its potentially my £60, that I haven't got and if they have done that to all of us, its £1000's 
Thanks for replying 👍

Jeremy535897

Wizawaz said:

Hi
I have been furloughed since March my wage has been calculated on £8.21 national minimum wage.
There was a minimum wage increase April 2020 to £8.72.
I understand that my wage was frozen before the NMW increase therefore I have been receiving 80% of £8.21 I totally get that part.

However my work has forced me to have 3 weeks of my holiday entitlement (which is from April 2020 to March 2021) and has calculated the holiday pay at £8.21
On the Acas website it says; The amount of pay that a worker receives for the holiday they take depends on the number of hours they work and how they are paid for those hours. The principle is that pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work and working. Holiday pay, whether the worker is on furlough or not, should be calculated in line with current legislation - see the standard guidance, based on a worker’s usual earnings. The underlying principle is that a worker should not be financially worse off through taking holiday. Where a worker has regular hours and pay, their holiday pay would be calculated based on these hours. If they have variable hours or pay, their holiday pay is calculated as an average of the previous 52-weeks of remuneration excluding weeks in which there was no remuneration.
Surely this means that my holiday pay should be calculated on the new NMW £8.72
I have emailed my work to query this and they replied with;
National minimum wage (NMW) needs to be paid for all hours that am employees actually works.This is why paying furloughed staff 80% of their wages is allowed, even if this takes an employees pay to below NMW. The recent increase in NMW is not taken into consideration for calculating furlough pay, as furlough pay is based on people's past earnings which would have been before NMW increased. (Under the governments furlough rules sadly no pay rises can be awarded to any person whilst on furlough.)
Using the same method as above, holiday pay for employees is based on their average pay and average hours worked from the past 52 weeks, excluding any whole weeks in which they didn't work. Therefore, holiday pay entitlement is based on the average pay for the 52 weeks worked prior to being furloughed, which would have been paid at the previous NMW rate.
It just isn't clear enough. I have contacted Acas and they aren't sure either in fact have suggested that I contact an employment solicitor. I was wondering if any of you can provide me with a clearer understanding. I kinda feel ripped off!
Kind Regards

I assume from the calculation used by your employer that you are not on a regular salary, but work a different amount of hours each month. The legislation is in the Working Time Regulations 1998, which import definitions in sections 221 to 224 of the Employment Rights Act 1996.

The basic rule is that you look at the 52 weeks prior to the holiday to calculate the average wage rate for holiday pay. If there are weeks with no pay, you ignore those, and go back extra weeks until you hit 104 weeks, when you stop. However, and this is a point I have not picked up earlier, there is an EU rule that applies to the 4 weeks excluding bank holidays, which says that you must use the "normal" rate of pay. There is a discussion of this in some guidance:
"Following rulings by the Court of Justice of the European Union,12 holiday pay for the 4 weeks’ leave guaranteed under EU law must be based on ‘normal remuneration’. The principle is that the worker should be in the same financial position as they would have been had they not taken the leave. This is to ensure that workers are not deterred from taking leave by being financially disadvantaged as a result. ‘Normal remuneration’ is interpreted to include payments that are normally received, including any commission, bonuses and overtime directly and intrinsically linked to the work that the worker is required to do. It also includes payments which relate to the status of the worker, such as allowances for seniority, length of service and professional qualifications. However, it does not include payments for expenses which the worker normally incurs when working, but does not incur when on leave, such as travel costs between different work locations."
See https://www.gov.uk/government/publications/calculating-holiday-pay-for-workers-without-fixed-hours-or-pay/calculating-holiday-pay-for-workers-without-fixed-hours-or-pay--2

There is a question then as to whether this allows you to exclude weeks where SSP applies, for example, and whether it allows you to uprate to the new NMW, since that would have been the "normal" pay per hour now. It may also allow furlough periods to be ignored, as your employer is doing. You may also find the following useful:
https://www.gov.uk/guidance/holiday-entitlement-and-pay-during-coronavirus-covid-19

I think the other posters who point out the modest amount involved are probably correct to say "accept what you are offered".

Wizawaz

I am on a regularly salary each month. I've worked there for 4 years.There is no overtime and no bonus scheme so may wage does not fluctuate. 
I will read through thanks 👍

Jeremy535897

Normally your holiday would be based on your wage before your holiday. That would suggest that it should be based on the pay you received under furlough, but most commentators think you should get 100% of your wage. As I said above, I have struggled to find the authority for this, and that was because it comes from EU case law, as I quoted in the previous post. If you can argue that furlough is not "normal" for this purpose (and what is "normal" is by no means clear to me, but as in your case this would be less than NMW, then I don't think it can be), then I think you should get the pay you would otherwise have got, which is 100% of new NMW, but I say this without any real confidence.

luvchocolate

This subject was on the Martin Lewis programme the other night and he confirmed holiday pay is on the increased amount. 
Apparently a lot of employers have got it wrong and been paying pre April 

yksi

luvchocolate said:

This subject was on the Martin Lewis programme the other night and he confirmed holiday pay is on the increased amount. 
Apparently a lot of employers have got it wrong and been paying pre April 

The reason for this is that holiday entitlement is in hours, not in pounds and pence. You are due the hours (at the current NMW) at the time that holiday is paid. This is what you need to explain to your payroll people - that your accrued holiday is X number of hours' entitlement paid out according to the NMW at the time of being paid. Explain it politely, note that it is a common error, and cross your fingers that they agree to fix the error, otherwise your next appropriate step is a polite letter giving them X days to pay what you are owed.

Wizawaz

Thanks, I will write a letter. 👍