CJRS: 80% claim on minimum living wage?

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Hi.  I was just wondering about the 80% claim regarding the Minimum living wage which went up on 1 April 2020 from £8.21 to £8.72.  When I put in a claim for 20/21 under CJRS, can I claim 80% on the new £8.72 figure, or have I got to claim 80% of the £8.21 figure that was in place in March? My 20/21 payroll has been updated for the £8.72 figure. Any help would be greatly appreciated. Thanks.

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By Wanderer
23rd Apr 2020 11:09

Old figure.

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By lionofludesch
23rd Apr 2020 11:10

They're not working so the living wage is 0 hours at £8.72 an hour = £0.00.

I believe that this is now well established wisdom.

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By jules66
23rd Apr 2020 11:23

I agree with previous comments BUT yesterday had a client say they were going to furlough one of their employees late in April. The employee joined after 6/4/19 and has irregular wages. The guidance says

Employees whose pay varies and who started employment after 6 April 2019

If the employee started their employment after 6 April 2019, claim for 80% of their average monthly wages since they started work until the date they are furloughed, up to a maximum of £2500 per month.

To work out 80% of your employee’s average monthly earnings:

1.Start with the amount they earned in the tax year up to the day before they were furloughed.

2.Divide it by the number of days they’ve been employed since 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.

So, as they are furloughed in a new tax year, this reads that we need to use their average pay from 6th April 2020 to the day before they were furloughed (24/4) they are monthly paid, so we have not yet processed their April pay. If they were hourly paid at the minimum wage this also reads to me that we would use their new hourly rate? Any one else agree or come across this? I did work out their average daily rate since they started work up to 5th April out of curiosity, but the guidance doesn't say to do this. I guess that HMRC expected most employees to be furloughed from March or 1st April?

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Replying to jules66:
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By lionofludesch
23rd Apr 2020 11:48

jules66 wrote:
If they were hourly paid at the minimum wage this also reads to me that we would use their new hourly rate?

No - they don't get a pay rise on furlough.

Whether it's above or below minimum wage.

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Replying to lionofludesch:
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By jules66
23rd Apr 2020 12:51

lionofludesch wrote:

jules66 wrote: If they were hourly paid at the minimum wage this also reads to me that we would use their new hourly rate?

No - they don't get a pay rise on furlough.

Whether it's above or below minimum wage.


They will as they worked as normal for 1- 24th April, so that would be paid under the new NMW rates.
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By meadowsaw227
23rd Apr 2020 11:49

Hmm

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By Paul Hawes
23rd Apr 2020 12:20

This bit "(up to the day before they were furloughed or 5 April 2020 – whichever is earlier)." makes it clear that they are thinking about employees being furloughed in the 20/21 tax year. I think you're looking for something that's not there.

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Replying to Paul Hawes:
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By jules66
23rd Apr 2020 12:56

Paul Hawes wrote:

This bit "(up to the day before they were furloughed or 5 April 2020 – whichever is earlier)." makes it clear that they are thinking about employees being furloughed in the 20/21 tax year. I think you're looking for something that's not there.


ahhh...yes, thank you! I read this section numerous times yesterday, it's with it saying "start with the amount they earned in the tax year up to the day before they were furloughed" and in this case it would be April 2020-21 tax year. I didn't think it made sense not to use previous years earnings and calendar days since they started.
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By gillybean04
23rd Apr 2020 12:21

7.2 Except in relation to a fixed rate employee, the reference salary of an employee or a person
treated as an employee for the purposes of CJRS by virtue of paragraph 13.3(a) (member of a limited liability partnership) is the greater of-
(a) the average monthly (or daily or other appropriate pro-rata) amount paid to the
employee for the period comprising the tax year 2019-20 (or, if less, the period of
employment) before the period of furlough began, and
(b) the actual amount paid to the employee in the corresponding calendar period in the previous year

So there you have it.....the average monthly amount paid to them during the 19/20 tax year. Which would have been based on minimum wage of £8.21

This of course is what the employer can reclaim. The employer should be paying their employee whatever they have agreed (with 80% of the CJRS amount being the minimum if the employer is using CJRS).

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By PChapman
27th Apr 2020 12:58

As I understand it, the salary up to March is the reference for all Furlough payments irrespective of what pay rises the employee may be entitled to after

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