Furlough pay for weekly paid on variable hours

What is the exact method of calculating furloughed workers, on zero hours contracts, weekly pay ?

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I have read HMRC guidance on this matter and am a little confused. It states you can claim for the higher of either the same months' earning from the previous year  or the average monthly earnings for the 2019/20 tax year.

  1. I am assuming this can also be done on a weekly basis for employees who are paid weekly ?
  2. The guidance states you "can claim" - does this mean the employer can choose between the 2 figures ?  Does the higher of these 2 figures just set the maximum you can pay in furlough grant and you choose between them ?
  3. When loking at the average monthy earnings, you exclude bonuses and commissions etc but do you also exclude any overtime worked ? 
  4. Have you got to do this comparison for each pay preiod ( ie each weeks pay) or once you have chosen a method can you just apply this each time ?
  5. I assume the average for the 19/20 tax year will be the year ending  5/4/20 or date employee was furloughed ?

Does anyone know if HMRC have piublished more details guidance on this subject with maybe some worked examples ?

Replies (6)

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By paul.benny
03rd Apr 2020 12:12

Windy wrote:
Does anyone know if HMRC have published more details or guidance on this subject ?

Yes I do and No they haven't.

Thanks (1)
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By mands44
03rd Apr 2020 16:52

No guidance anywhere for weekly variable so Ive just taken the view of using the monthly rules and applying it for weekly so this week I used week 52 of last year as my comparason week v 2019/20 weekly average. Chose the highest per employee then 80% and showed this on the payslip. This was quite a task so set up a spreadsheet template to keep track. Im hoping just showing logical documentation of this if requested to do so will be enough. My only question now is whether this is then the figure to use throughout the furlough period? Im really hoping so!

Thanks (2)
Replying to mands44:
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By Windy
06th Apr 2020 10:15

Looking at the guidance from HMRC for an employee whose pay varies, it refers to the higher of the same months earning from the previous year or average monthly earnings for the 19/20 tax year. If you substitute weekly for monthly, this implies you have to compare each week to the previous year and then compare with the average calculated for 19/20. At least the latter figure needs only be calculated once. Just my interpretation of the guidance but will entail a lot of work !

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
04th Apr 2020 12:53

These issues are covered, sort of, in HMRC's guidance for employers here:
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus...

Existing guidance says: "If the employee has been employed for 12 months or more, you can claim the highest of either the:
- same month’s earning from the previous year
- average monthly earnings for the 2019-2020 tax year.

If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work.

If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80.

Some new bits have been added this morning for those asking about Overtime, Fees, Commission, Bonuses and non-cash payments:
"You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded."

Thanks (1)
Replying to John Stokdyk:
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By Windy
06th Apr 2020 10:20

Thanks John.
I note that the new guidance states the employer must be registered for PAYE online to apply for the grant ? I deal with several clients for whom I have agent authorisation online set up but the employer does not have individual PAYE Online.
I am hoping that the agent can process a claim for their client using their own registration but no confirmation of that in the guidance as far as I can see ?

Thanks (0)
Replying to John Stokdyk:
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By Windy
06th Apr 2020 10:20

Thanks John.
I note that the new guidance states the employer must be registered for PAYE online to apply for the grant ? I deal with several clients for whom I have agent authorisation online set up but the employer does not have individual PAYE Online.
I am hoping that the agent can process a claim for their client using their own registration but no confirmation of that in the guidance as far as I can see ?

Thanks (0)