Where does the annualised pay go during Furlough?

Annualised pay seems to disappear on JRS! Staffs Annualised pay rate is about£2 less than they earn.

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Every £2 is then building up in a 'spreadover' pot so they get paid the same pay during school holidays. Their accrued holiday pay is added to it, so they get the same every month. However, on Furlough they are getting 80% of an annualized monthly wage and then just 100% of the accrued holiday. They keep losing their  'spread over' pot.

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By Youareatit
15th Feb 2021 16:51

Cant get excited about two quid

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RLI
By lionofludesch
15th Feb 2021 17:15

Maybe if you could explain your problem in a less opaque way ....... ?

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By Hugo Fair
15th Feb 2021 17:49

I assume that you're talking about TTO (term-time only) employees who are paid at a 'smoothed' rate so that their gross annual salary is received via 12 monthly payrolls? If so, I hope they are not on any kind of 'variable hours' contract, because the concept of accruing holiday pay as a %age of hourly pay rates has been illegal for a while now.

But anyway, as lionofludesch says, you need to re-state the background to your question in much clearer terms. For instance:
* What is an example 'annualised salary'?
* What is the 'spreadover pot' and how is it calculated?
* What is the 'annualized monthly wage' on which 80% is claimed under CJRS?
* Is the claim made every month or only during term-time?
* Is it clear to the employer when an employee is receiving holiday pay (i.e. when they are actually on holiday which must be dates quite distinct from those when working)?

I could go on (holiday entitlement and pay is a complex enough area even without CJRS), but if we had answers to the above questions it's just possible that your question would be able to be understood.

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Replying to Hugo Fair:
RLI
By lionofludesch
15th Feb 2021 18:04

I never really understand these annualised pay schemes.

Are they not just ordinary pay schemes except you have to take your holiday entitlement at specific times ?

Folk make such a fuss about them.

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Replying to lionofludesch:
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By Hugo Fair
15th Feb 2021 18:57

In essence, Yes. But like so many procedures in the public sector (this approach for probably obvious reasons is particularly prevalent within the Education sector), the law of unintended consequences can often run amok.

The initial principle was the (slightly condescending) belief that people like teachers couldn't be relied on to save towards their needs during the holiday period - so should have the total of their projected earnings for the year divided into monthly amounts (and be paid each month irrespective of whether it was term or holiday time).

Unfortunately that sector has a high prevalence of staff on hourly pay (as opposed to salary), and the concept arose of paying them a higher hourly rate ("rolled-up holiday pay") - such that their holiday pay entitlement was always up-to-date.

However, many years ago, the working time regs demanded it should be clear that an employee took their paid holiday (i.e. was being paid for time-off under H&S requirements) ... so the concept of what I like to call unrolled-up holiday pay arose (more commonly referred to as holiday pay accruals). This used the same 2-part hourly rate, but only paid the bit for worked hours - until the employee took holiday (and could withdraw an amount from their personal accrued 'pot').

You'll not be surprised to hear that this too eventually fell foul of the legislators ... leading to the current (insane) position where the employer can only calculate the amount of holiday pay to which an employee is entitled when they know the start date of the proposed holiday - as the calculation is not related to the hourly pay but to the average of the actual pay in the previous 52 weeks (or up to 104 weeks if there were unpaid weeks in the last year)!

Amongst many idiocies this means that the same employee can be paid different amounts for two periods of a 1-week holiday that are only separated by a week (if for instance there was substantial overtime 51 / 53 weeks ago); or indeed that two employees on the same hourly rate can receive different pay when they go on holiday together!

Although I could go on for hours (but won't I promise), one other example of the pitfalls of operating TTO contracts. When my wife decided to retire, she handed in her letter to the school stating that she was resigning with effect from 30th June ... and was astonished at the foul language I used as we drove back to rescue the letter and amend it to say 31st August. No difference in the days she had to work, but 2 months difference in the amount of pay received.

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Replying to Hugo Fair:
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By lionofludesch
16th Feb 2021 07:34

Thanks.

I think.

What holes we dig for ourselves.

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By Lorrain
15th Feb 2021 18:18

Sorry, thank you for giving me a chance to explain, a staff member earns.. £8.72 p/h, 40 hours a week, 35 weeks a year + 5 weeks holiday pay. Gross pay £13,952, their pay is Annualised, so they get £1,163 every month. That is about £300 less than if they were paid a full working month, this money pays for the 12 weeks that they are not working, but they have actually earned that money. When on Furlough they are only getting 80% of £1,163 and not any of the £300 earnt money back.

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Replying to Lorrain:
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By lionofludesch
15th Feb 2021 18:30

Lorrain wrote:

Sorry, thank you for giving me a chance to explain, a staff member earns.. £8.72 p/h, 40 hours a week, 35 weeks a year + 5 weeks holiday pay. Gross pay £13,952, their pay is Annualised, so they get £1,163 every month. That is about £300 less than if they were paid a full working month, this money pays for the 12 weeks that they are not working, but they have actually earned that money. When on Furlough they are only getting 80% of £1,163 and not any of the £300 earnt money back.

OK - well, as I see it, if they've earned it, they should be getting that money at some point. Nothing to stop you paying them more than their 80% furlough money. You are, of course, prohibited from paying them less.

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Replying to Lorrain:
JCACE
By jcace
15th Feb 2021 18:46

Surely they'll get some of the £300 back (or at least 80% of it) when they are paid for any of the 12 weeks they're not working.

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Replying to jcace:
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By SXGuy
15th Feb 2021 19:19

Exactly my thoughts also.

Op seems to be picking and choosing when this accrued pay is due based on whether is a furlough payment or normal pay.

Can't have it both ways.

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Replying to Lorrain:
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By Hugo Fair
15th Feb 2021 19:16

OK, I follow the maths but the bit where you say "That is about £300 less than if they were paid a full working month" seems irrelevant to me. Presumably their Employment contract specifies the TTO arrangement for payroll payments?

The important bit that's been omitted here is when does the employee actually take paid holiday (a statutory requirement). And this can have two impacts:
1. As per my lengthy diatribe above, if the employee is on any form of variable or hourly pay then the calculation of holiday pay is a separate exercise.
2. Under the CJRS regs, the employer must pay the employee 100% of the holiday pay entitlement when it is taken (not the minimum 80% claimed by employer).

So, for instance, if the employee is salaried and were fully furloughed for 12 months then only 80% of their £13,952 gross pay could be claimed by the employer - but the employer (in addition to paying at least this amount to the employee) must ensure the employee receives 100% of their £8.72 p/h for the periods on which holiday is formally booked (i.e. the extra 20% for those hours).

This is no worse than the position of any furloughed employee - so long as the employee receives the contractual paid holiday during the course of the year.

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