Furloughing part months

Do we have a cap if it's a part month?

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As you all probably know… we all want to get this just right for all of our clients… Re: Furloughing… from reading the guidance, my understanding is that HMRC appears to be using the reference period for the £2500 cap as a calendar month. If this is the case, does anyone possibly have a definitive answer that if someone is furloughed part way through a month, should the cap of £2500 be pro rata’d for only that part of the month or if the £2500 is exceeded with just that part of that month, that the whole £2500 can be applied for despite it being for maximum claim per employee per month?  Thanking you in advance for your kind replies.

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By tom123
08th Apr 2020 12:05

The cap will be on the rate of pay per month, based on salary for February for a full month.

You can be on furlough for a minimum of 3 weeks, but the cap would have to be pro-rated. (not sure if they have publicised how)

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By louised
08th Apr 2020 20:16

We were struggling to work this out too, this month we have one company furloughing after 5 days of full pay. So we were thinking to give 5 days full pay as expected, then the remaining 17 days of the month at 80% of February day rate. Bearing in mind they are salaried staff. Would this be the correct method do you think? I've no idea real how we would then work out the employer NI that can be claimed back or the pension as it will only be 17 days worth.

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By the_fishmonger
09th Apr 2020 12:55

The HMRC guidance states: "Grants will be prorated if your employee is only furloughed for part of a pay period." under the How much you can claim header.

Link: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus...

Whether they will prorate what you have paid gross or not, isn't yet detailed. Like many of the more nuanced queries (or those relating to weekly paid employees) on AWeb, it probably won't be answered until the grant claims start to be checked sometime in the future.

FWIW we have adopted the normal salary for normal working days + 80% salary x furloughed working days in this situation, as has @louised.

For Weekly paid:
- 80% average of last 12 months ÷ or March 2019 x 12/52 (if higher); OR
- 80% of average weekly pay from start date, where not employed for a year; OR
- 0% if started on/after 29th Feb 2020 - inform client to instruct employee to try and seek reinstatement on furlough with previous employers (where applicable)

Would be interested to know if anyone is doing the weeklies differently (after all the furlough periods are 3 weeks and we have rotation of employees with some of our clients)

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Replying to the_fishmonger:
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By unearned luck
10th Apr 2020 02:20

Yes, see here for what I think should be done for weekly pay:

https://www.accountingweb.co.uk/any-answers/jrs-weekly-paid-staff-calc

I think it's a mistake to try to convert weekly pay to monthly equivalent (if that is what you are advocating, I'm not sure). Much easier to convert the £2,500 cap to a weekly equivalent. It will probably prove to be the correct way, per the law.

You don't take the average of the last twelve months but the average pay of the 2019/20 tax year. (little difference for pay in April but the difference will grow for later months). I don't understand your "March 2019 x 12/52". How can there be a monthly figure for March if the employee is paid weekly? If you are taking "March 2019" to be the sum of the pay in the calendar month, or the tax month ended 5/3/19 or the tax month ended 5/4/19 then depending on the employer's week end date you would 4 or 5 weeks, so you could answers that differ by 25% all other things being equal. Also you don't take into account the pay "of 28 February", which for weekly paid staff must be the pay for the working week that ends between 22 Feb and 28 Feb.

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By unearned luck
10th Apr 2020 01:57

I don't think that the £2,500 is based on calendar months, but simply on months when ever ended. Eg if an employee got paid on the 20th of the month for the month then ended, there would be no need to apportion the pay or anything else between the two calendar months in question. If I'm wrong then I think that tax months are much more logical basis periods that calendar months. But parliamentary draftsmen show little interest in logic given their output in the tax field.

In any event the £2,500 is a cap on the reference pay. So, you work out the non-discretionary part of the pay for the three reference periods, take the highest, if necessary cap it at £2,500. If the employee is only furloughed for part of the month that the employee is being paid for then you pro rata the reference pay (capped as necessary to establish the furlough element. See my answer to this query https://www.accountingweb.co.uk/any-answers/jrs-weekly-paid-staff-calc

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