Furlough - variable or zero hours

How do we calculate pay for Furlough

Didn't find your answer?

Has anyone found any guidance on how to calculate pay for furloughed workers who were on zero hour contracts?  I have a client who has paid his employees quite different amounts over the last few months depending on the hours they worked.  Can we take an average, and if so, over how long a period?

Replies (24)

Please login or register to join the discussion.

By Duggimon
25th Mar 2020 09:53

I would guess it'll be the same as how you do holiday pay, but I'm guessing because there is no guidance.

Thanks (0)
Replying to Duggimon:
avatar
By SarkaT
25th Mar 2020 15:52

Guidance from Sage HR has been to use 12 week average.
I have not seen anywhere official that February pay should be used, that so many here have been advised. For zero hour workers, that seems a bit unfair I think? I read somewhere self-employed package is rumoured to be a three-year average. Even if it is just a one-year average, pay for Feb as a basis for ZHC seems extremely unfair, lots of these people are doing seasonal work...

Thanks (0)
RLI
By lionofludesch
25th Mar 2020 10:06

February pay seems to be where the smart money is being wagered.

But no official guidance as far as I know.

The bright side is that with zillions of claims being made further down the line, I can't see a lot of quibbling going on against any reasonable payments.

Thanks (0)
Replying to lionofludesch:
Tornado
By Tornado
25th Mar 2020 11:03

"February pay seems to be where the smart money is being wagered"

This seems to be the way we have read the situation too. What is not clear is if the employers total wages cost on which the 80% is based is salary + employer NIC + benefits + pension contributions + anything else that is a cost to the employer.

Thanks (0)
avatar
By sallyrichardson
25th Mar 2020 10:24

Hi. Brightpay our payroll software provider has said categorically that the reclaim will be based on the February pay. We are suggesting that payments made to staff are as per the basic hours in their contracts. If they are zero hours we are suggesting that 80% of February pay should be paid, as this is the amount they should be able to claim back.
Really hoping this is clarified by the government by the end of the week.

Thanks (0)
By Steve Holloway
25th Mar 2020 10:42

Very interesting ... I can see that payroll providers might have been given a heads-up by HMRC as I would guess there is a lot of programming to do to make software talk to this 'portal'!

Thanks (0)
Replying to Steve Holloway:
avatar
By 0098087
25th Mar 2020 10:47

What do we do with the year end?

Thanks (1)
Replying to 0098087:
RLI
By lionofludesch
25th Mar 2020 11:38

I don't think the year end procedure itself is a problem.

Nobody thought about furlough so you don't have to report it separately.

Just as you didn't have to report salary and commissions or bonuses separately.

As far as RTI is concerned, pay is pay.

Thanks (0)
Replying to lionofludesch:
avatar
By 0098087
25th Mar 2020 11:20

Yes but if it's backdated to March. What wages do you put through for March if a pub is closed? They don't know what hours they would have worked.

Thanks (0)
Replying to 0098087:
RLI
By lionofludesch
25th Mar 2020 11:25

Based on their February pay,

Apparently.

Thanks (0)
Replying to 0098087:
avatar
By Romanov
25th Mar 2020 18:41

It would be based on the previous 12 weeks prior to March 1st.

Thanks (0)
avatar
By Peter613
25th Mar 2020 11:02

Do you pay the 100% and claim back 80% of that , or pay them 80% of their usual pay and claim that back

Thanks (0)
Replying to Peter613:
avatar
By alfredpennypinch
25th Mar 2020 11:18

The advice there is that employers can make up the 20% shortfall if they want, but don't have to.

https://www.gov.uk/government/publications/guidance-to-employers-and-bus...

Thanks (0)
Replying to alfredpennypinch:
A Putey FACA
By Arthur Putey
25th Mar 2020 13:02

Many appear to be jumping to conclusions on this point from the gudance to employees
"Your employer could choose to fund the differences between this payment and your salary, but does not have to."
which seems at odds with the gudance to employers
"changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation"

Putting the two together could only be read as you don't have to if your employee's contract of employment includes provisions for lay offs and short time working. That's what I'm telling my clients, until such time as detailed guidance is available.

Thanks (0)
Replying to Arthur Putey:
x
By rockallj
25th Mar 2020 16:26

Arthur Putey wrote:

Many appear to be jumping to conclusions on this point from the gudance to employees
"Your employer could choose to fund the differences between this payment and your salary, but does not have to."
which seems at odds with the gudance to employers
"changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation"

Putting the two together could only be read as you don't have to if your employee's contract of employment includes provisions for lay offs and short time working. That's what I'm telling my clients, until such time as detailed guidance is available.

I think you're spot on. The employer is liable to pay the employee 100% of their pay or else it is breach of contract. By furloughing, the employee is giving consent temporarily waiving their right to this.

Thanks (0)
Replying to rockallj:
avatar
By Romanov
25th Mar 2020 18:40

That is correct. The presumption is that faced with redundancy or 80% of their salary, the employee will choose the 80%, accepting reduced wages by consent. Some contracts, not many but some, will have a lay-off clause that does not require consent. I predict many future contracts will be adding this clause.

Thanks (0)
Replying to alfredpennypinch:
avatar
By SarkaT
25th Mar 2020 14:37

There is a new BEIS bulletin specifying that minimum wage legislation still has to be followed. So we are taking the approach that if the 80% falls below minimum wage, we will have to top up.
https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

Thanks (0)
Replying to SarkaT:
avatar
By Romanov
25th Mar 2020 18:36

That brief is concerned about any advance payments employers make outside of the job retention scheme and how they recover it from the employee

Thanks (0)
Replying to Peter613:
RLI
By lionofludesch
25th Mar 2020 11:25

seitler wrote:

Do you pay the 100% and claim back 80% of that , or pay them 80% of their usual pay and claim that back

Up to you.

Thanks (0)
avatar
By whatdoyoumeanwashe
25th Mar 2020 14:23

Anyone have any thoughts on what would happen if an employer made the employee redundant when the furlough grant scheme eventually ends? I have employers worried that if they need to make the person redundant at the end of the scheme as their business hasn't recovered in time, they might be asked by the government to repay the furlough grant. Thoughts please?

Thanks (0)
Replying to whatdoyoumeanwashe:
x
By rockallj
25th Mar 2020 16:09

Who knows?

Thanks (0)
Replying to whatdoyoumeanwashe:
avatar
By Romanov
25th Mar 2020 18:32

Once the furlough period ends, unless the Government make a further announcement, then the employee will revert back to their contract of employment and any provisions it holds regarding termination or redundancy.

Thanks (0)
avatar
By Romanov
25th Mar 2020 18:29

It has to be based on the previous 12 week's average as per section 221(2) of the Employment Rights Act 1996. That has always been the standard (well since 1996) of calculating any salary of irregular workers.

However take note that from 6 April 2020, The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 will change that to the previous 52 weeks.

Thanks (0)
x
By rockallj
29th Mar 2020 17:45

Newsflash folks, this has been updated so see HMRC's website

Thanks (0)