For any employees furloughed over a period of two calendar months, the maximum amount for each calendar month will need to be calculated and added together.
If a claim is being made for multiple pay periods in one claim, the total maximum can be calculated using a mixture of the daily maximum wage amount, the weekly maximum wage amount and the monthly maximum wage amount. The following example is included: • A Limited company pays all of their employees weekly on each Friday and puts all of their employees on furlough on Wednesday 8 April 2020. • A Ltd will need to calculate the grant using the daily calculation for the first pay period which ends on Friday 10 April 2020. This is £83.34 multiplied by 3 days, which is £250.02. • For the next pay period, 11 April 2020 to 17 April 2020, the maximum amount is £576.92 because the pay period is a whole week, and the employee is furloughed on each day. • A Ltd makes a claim for 8 April 2020 to 17 April2020. The maximum wage amount that they can claim for is the two amounts added, £826.94.
Calculate 80% of an employee’s normal wage
The calculator that will be available on 20 April 2020 will assist in the calculation of how much can be claimed. The method for calculating an employee’s usual wages will differ based on the way they’re paid. Claimants must check what can be included as wages first. The claimant must use the calculation that best fits the way the employee is paid, e.g. if an employee is paid a regular salary, use the calculation for fixed pay amounts. The guidance confirms that HMRC will not decline or seek repayment of any grant on the sole basis of the particular choice of pay calculation, as long as a reasonable choice of approach is made.
If a claim spans multiple pay periods, this calculation should be done for each period and then added together.
Calculate 80% of wages for fixed rate full or part time employees on a salary
The claim must be made for 80% of the employee’s wages from their last pay period before 19 March 2020. If claims have already been calculated based on the employee’s wages as of 28 February 2020, then this calculation can still be used for the first claim.
80% of the employee’s wage is calculated as follows:
1. Look at an employee’s wages, in their last pay period before 19 March 2020. If the claim is for a full pay period, skip to step four
2. Divide by the total number of days in the pay period 3. Multiply by the number of furlough days in the pay period 4. Multiply by 80%
The following example is provided:
Worker started work for B Ltd in 1997 and is paid a regular monthly salary on the last day of each month. The worker agreed to be placed on furlough from 23 March 2020. The worker was paid £2,400 for the last full monthly pay period before 19 March 2020. There are 9 days between 23 March and 31 March.
1. Start with £2,400 (employee’s wages) 2. Divide by 31 (the total number of days in March) 3. Multiply by 9 (the number of furlough days in March) 4. Multiply by 80% - which is £557.42
If employee has not been paid for a full pay period up to 19 March 2020
If the employee has not been paid for a full pay period up to 19 March 2020, the normal wages will need to be worked out, and then 80% of that calculated. This should be done as follows:
1. Start with the amount employee was paid in their last pay period 2. Divide by the number of days in the last pay period (inclusive of non-working days) 3. Multiply by the number of days that would have been in that pay period
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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