Furlough under paid

unholyangel

Lexi-Lisa said:

Ok, thank you, he has spoken to colleagues if they received a letter explaining how they were underpaid, and they did, hopefully he will get a copy sent so he has something to go on. Could he ring HMRC and ask the question about being underpaid and owed money?

They'd only be able to give you general info on tax or cjrs. They can't give advice on contracts of employment. 

They'd probably tell you to report the employer to them for fraud if you think they've not paid the correct amount and/or get advice on employment issues from cab (citizens advice) or acas. 

Lexi-Lisa

Hi, 
Attached is the email from his employer. Now my husband put his notice in, in August giving 2 weeks notice taking him up to 14th August. Could we write back from what they are saying here please, I don’t know if he has a case now though.

Jeremy535897

This is a case where the guidance is questionable, because:

• whether or not you are a fixed rate employee, as opposed to an employee whose pay varies, is not determined by the quantum of overtime worked. The law has no mention of "significant", "a lot", or "often"
• in any event, the law defining a fixed rate employee has never changed with regard to overtime over the whole period of the CJRS

The second Treasury Direction issued on 20 May 2020 states:
"7.6 A person is a fixed rate employee if-
(a) the person is an employee or treated as an employee for the purposes of CJRS by virtue of paragraph 13.3(a) (member of a limited liability partnership),
(b) the person is entitled under their contract to be paid an annual salary,
(c) the person is entitled under their contract to be paid that salary in respect of a number of hours in a year whether those hours are specified in or ascertained in accordance with their contract (“the basic hours”),
(d) the person is not entitled under their contract to a payment in respect of the basic hours other than an annual salary,
(e) the person is entitled under their contract to be paid, where practicable and regardless of the number of hours actually worked in a particular week or month in equal weekly, multiple of weeks or monthly instalments (“the salary period”), and
(f) the basic hours worked in a salary period do not normally vary according to business, economic or agricultural seasonal considerations."

Put simply, if your contract says you are hired for, and get paid for, a 40 hour week on a salary, but also get paid for any overtime (unless it is within (f) above), you are a fixed rate employee. @unholyangel and I debated this for a long time, and he convinced me in the end. A lot of employers were just saying they wouldn't include overtime for fixed rate employees, when they should have looked at the overtime in the last pay period before 20 March 2020, so more guidance had to be issued. But the government seems to be interpreting the law to say that if you work lots of overtime that varies widely, you aren't really a fixed rate employee, despite what the letter of the law says. Some employment tribunals have taken a similar view in cases where someone on a zero hour contract works the same hours every week for many months or years, and have said it isn't really a zero hour contract, despite what it says.

I should also point out that your husband was entitled to the pay set out in his employment contract, as varied by any furlough agreement. This does not have to be the same as the amount claimed by his employer under CJRS, although it may be that these documents simply say that he is paid what the employer claimed under CJRS, and no more.

While it is interesting (at least to me, although I am not a lawyer) to look at the letter of the law, I suggest that you first look closely at what the employment contract said, as amended by the furlough agreement, because if it says he is entitled to what the company claimed under CJRS, and no more, I don't think there's anything he can do. He could try ACAS, but I don't think they are likely to be of help. If, however, his contract/furlough agreement say something else, point this out.

Lexi-Lisa

Hi Jeremy535857 thank you so much for your insight, may I show you another, this letter below was what was sent to his colleagues regarding the payment. (Removing names and company

There was no other letter sent to confirm payments but there payments were backdated to beginning of furlough. 

I’m not sure how he would approach his old employer, any help in what to put in an email would be greatly appreciated. 

Jeremy535897

It's actually a well written letter. It is misleading in only one sense, which is that the advice they took was wrong. Contractual overtime was always supposed to be included, although early guidance did not make this as clear as it might have done. The only question in point was whether the contractual overtime to be included was based on the overtime worked in the last pay period prior to 20 March 2020 (for fixed rate employees), or based on the higher of the average for 2019/20 or the equivalent period in the previous calendar year. (This assumes every other component of pay remained static.)

None of this explains how your husband, or any other employee, became furloughed in the first place, or what their furlough pay was to be based upon. That does not have to be the same as what the employer could claim for their net pay (although it must be at least this much). There must be a furlough agreement somewhere, and that is what is needed to see if he has any argument.

Lexi-Lisa

Jeremy535897, thank you, I’m not sure, I will ask him if there is any other correspondences.

Lexi-Lisa

Hi Jeremy535897, spoke to husband and he never received a letter regarding furlough, but his colleague sent him a copy of the letter that was issued, the only paperwork my husband received was a letter to sign and confirm which i will upload. I have scribbled out company name and logos.

Sorry for copy, it’s not the best. From reading this, there clarity about overtime came when husband handed in his notice.

This is all what my husband received.



Thank you for looking at this, it’s very much appreciated.

Jeremy535897

Thank you. The letter shows a lack of understanding of the distinction between their obligation to pay employees wages under the employment contract (as amended by the furlough agreement), and their ability to claim CJRS from the government.

I would point out to them that, according to the letter, they say they will pay 80% of normal wages, and they await guidance on whether overtime should be included. Well, now they have the guidance, and overtime is to be included. The fact that your husband has since left does not relieve them of their obligation to pay what they said they would pay, because the agreement nowhere states that it is dependent on him still being employed by them at the point they establish the correct pay.

Whether they can reclaim the amount from the government under CJRS is for them, and has no bearing on what they should pay your husband. Crucially, there appears to be no clause saying his pay is limited to what they can recover under CJRS.

Lexi-Lisa

Thank you again, we have replied back to his employer, will be interesting to see their response. I will keep you posted.

Jeremy535897

Lexi-Lisa said:

Thank you again, we have replied back to his employer, will be interesting to see their response. I will keep you posted.

Good luck. I wish you success.