Am I entitled to more furlough?

wmggs

ive recently been look at the government guidelines for furlough, my wages vary month to month so i think im entitled to 80% of the same month of last year, but am only being paid 80% of my basic pay. (Which is almost half what i earnt each month of last year) I've asked my employer why they hadnt claimed for more and they responded saying they didnt want staff being paid different amounts for all staying at home. Ive tried to contact ACAS and HMRC to see if I have any right to ask them to claim for more furlough but they just respond frustratingly with "you need to speak to yoir employer" any help would be much appreciated as you can imagine earning almost 50% of a wage hour used to is having a drastic effect on my finances

Jeremy535897

The basic rule is that an employer must pay each employee an absolute minimum of 80% of their "reference salary", which for a variable pay employee is calculated as follows, capped at £2,500 a month (if you started working for your employer before 6 April 2019):

"Employees whose pay varies

You should calculate 80% of the higher of either:

• the wages earned in the corresponding calendar period in the tax year 2019 to 2020
• the average wages payable in the tax year 2019 to 2020

If your employee has variable hours you will have completed a similar comparison to work out their usual hours but the outcome may be different.

To calculate 80% of the wages from the corresponding calendar period in the tax year 2019 to 2020:

1. Start with the amount they earned in the same period last year.

2. Divide by the total number of days in this pay period - including non-working days.

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

4. Multiply by 80%.

If your employee did not work for you in the corresponding calendar period in the tax year 2019 to 2020, you can only use the averaging method to calculate 80% of their wages.

Find an example of claiming for the same period last year.

To work out 80% of the average monthly wages for tax year 2019 to 2020:

1. Start with the amount of wages that were payable to the employee in the tax year up to the day before they were furloughed.

2. Divide it by the number of days from 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%.

Find an example of working out 80% of average monthly wages for the last tax year. "

From https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme

The guidance on how to calculate the reference salary is here:

"What to include when calculating wages

The amount you should use when calculating 80% of your employees’ wages for hours not worked, is made up of the regular payments you are obliged to make, including:

• regular wages you paid to employees
• non-discretionary payments for hours worked, including overtime
• non-discretionary fees
• non-discretionary commission payments
• piece rate payments

You cannot include the following when calculating wages:

• payments made at the discretion of the employer or a client - where the employer or client was under no contractual obligation to pay, including:
  • any tips, including those distributed through troncs
  • discretionary bonuses
  • discretionary commission payments
• non-cash payments
• non-monetary benefits like benefits in kind (such as a company car) and benefits received under salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay

The entirety of the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

Normally, an employee cannot switch freely out of most salary sacrifice schemes unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

Non-discretionary payments

When you’re working out if a payment is non-discretionary, only include payments which you have a contractual obligation to pay and to which your employee has an enforceable right.

When variable payments are specified in a contract and those payments are always made, then those payments may become non-discretionary. If that is the case, they should be included when calculating 80% of your employees’ wages.

Non-discretionary overtime payments

If your employee has been paid variable payments due to working overtime, you can include these payments when calculating 80% of their wages as long as the overtime payments were non-discretionary.

Payments for overtime worked are non-discretionary when you are contractually obliged to pay the employee at a set and defined rate for the overtime that they have worked."

From https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme

There is a fundamental rule that if an employer pays less than 80% of reference salary, no claim at all may be made in respect of that employee under the CJRS. Where this underpayment results from a "reasonable" but erroneous method of calculation, HMRC may accept it.

wmggs

So does this mean the have to pay my furlough based on last years wages or can they choose to apply for furlough using my basic pay? 

Jeremy535897

If you are not a fixed rate employee, they have to pay at least 80% of the higher of either:

• the wages (including contractual overtime, shift pay etc) earned in the corresponding calendar period in the tax year 2019 to 2020
• the average wages payable in the tax year 2019 to 2020

If you are a fixed rate employee, they should pay you at least 80% of your wages (including contractual overtime, shift pay etc) that you were paid in the last period ending before 20 March 2020.

wmggs

I am a fixed rate employee, they have already said they will not be paid based on last years wages, so where do i stand are they breaking any laws? Or is it just morally wrong?

sharpe106

You said your a fixed rate employee but they are only paying you 80% of your basic pay which is less then half of your normal pay. So where does the rest of the pay come from? Is it shift allowance?

wmggs

@sharpe106 some of it working away allowance which i understand cant be claimed for but most of it is overtime, as i work away from home every week

sharpe106

Is working away allowance in your contract? if so as you can claim shift allowance I do not see why you can't claim for that as is basically the same. If you can claim for the overtime depends if it meets the following criteria. 

Non-discretionary overtime payments

If your employee has been paid variable payments due to working overtime, you can include these payments when calculating 80% of their wages as long as the overtime payments were non-discretionary.

Payments for overtime worked are non-discretionary when you are contractually obliged to pay the employee at a set and defined rate for the overtime that they have worked.

Jeremy535897

You are probably a variable pay employee if your overtime varies each pay period, not a fixed rate employee.

unholyangel

Jeremy535897 said:

You are probably a variable pay employee if your overtime varies each pay period, not a fixed rate employee.

Overtime has absolutely nothing to do with whether someone is a fixed rate employee or not. Overtime only factors in when calculating their reference salary after you have established whether they are fixed rate or not. 

Whether someone is a fixed rate employee is determined solely on their basic hours. 

Jeremy535897

unholyangel said:

Jeremy535897 said:

You are probably a variable pay employee if your overtime varies each pay period, not a fixed rate employee.

Overtime has absolutely nothing to do with whether someone is a fixed rate employee or not. Overtime only factors in when calculating their reference salary after you have established whether they are fixed rate or not. 

Whether someone is a fixed rate employee is determined solely on their basic hours. 

It depends on how the contract is worded. I did say "probably", as the majority of people on overtime on this forum seem to have been treated as non fixed rate employees..