Furlough calculation and payment in arrears

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Hello, we have had a client whose employees are paid in arrears, most of the employees work irregular hours. So in an example whereby the employee started work in early January, they were first paid in February for hours worked in January. In March they were paid for hours worked in February. So basically they have two month's in which they have been paid, but the working days from when they started work to when they were furloughed is almost 3 months. This has of course lowered the daily rate of furlough that they are being paid and the employee has queried this. How has anyone else dealt with this please? Is it just one of those things where some employee's gain and some lose? I know the employer could make up the difference and not claim under CJRS. Thanks in advance.

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By LW64
26th May 2020 10:51

Different calculations depending on length of employment:

1 - Employees whose pay varies and were employed from 6 April 2019

If the employee has been employed continuously from the start of the 2019 to 2020 tax year, you can claim the highest of either:
•80% of the same month’s wages from the previous year (up to a maximum of £2,500 a month)
•80% of the average monthly wages for the 2019 to 2020 tax year (up to a maximum of £2,500 a month)

2 - 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.

4.Multiply by 80%.

Every day or period after the employee commenced employment with the employer is counted in making this calculation. This includes days when no work was undertaken.

https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim...

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By TMK Accounts
26th May 2020 11:07

Hi
I have a client doing exactly the same and used the year to date figures/weeks since start of employment where relevant as per the guidance.
It just meant that at the end of April the employees received 6 weeks furlough pay and 2 weeks pay for hours worked the first couple of weeks of March.

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Replying to TMK Accounts:
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By JHC
26th May 2020 12:53

TMK Accounts wrote:

Hi
I have a client doing exactly the same and used the year to date figures/weeks since start of employment where relevant as per the guidance.
It just meant that at the end of April the employees received 6 weeks furlough pay and 2 weeks pay for hours worked the first couple of weeks of March.

Hi, thanks for the reply. It's more the calculation of the average that they are querying. So for ease, say they started 1/1/20 and were furloughed on 1st April. They received no pay in January, £500 in Feb (re their January hours) and £750 in March (re their February hours) March hours were paid in April. So total pay before they were furloughed is £1250, divided by 91 days (Jan to March) =£13.73 daily rate of which they would receive the 80% They are saying that it's unfair that we are dividing by 91 day, effectively 3 months, when only 2 month's pay are taken into account.

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