4. Divide by the total number of days in this pay period 5. Multiply by the number of furlough days in this pay period 6. Multiply by 80%
The following example is provided:
Employee started work for B Ltd on 21 February 2020 and is paid on the last day of each month. The employee had not had a full pay period up to 19 March 2020, but was paid £700 as a pro-rata of their salary on 29 February 2020. There are 9 days between 21 February and 29 February. The employee agrees to be furloughed from 25 March 2020. There are 7 days between 25 March and 31 March.
1. Start with £700 (the amount they were paid in their last pay period) 2. Divide by 9 (the number of days in their last pay period – including non-working days) 3. Multiply by 29 (days in February)
4. Divide by 31 (the total number of days in the March pay period) 5. Multiply by 7 (the number of furlough days in the March pay period) 6. Multiply by 80% - which is £407.46
Calculation for employees whose pay varies, that were employed from 6 April 2019
For employees who have been continuously employed from the start of the 2019-20 tax year, a claim can be made for the higher of either (up to the cap of £2,500 per month):
• 80% of the same month’s wages from the previous year • 80% of the average monthly wages for the tax year 2019-20
Where calculating 80% of the month’s wages from the previous year:
1. Start with the amount they earned in the same period last year 2. Divide by the total number of days in this pay period – including non-working days 3. Multiply by the number of furlough days in this pay period 4. Multiply by 80%
The following example is included:
A Ltd pays an employee on a weekly basis. The employee’s pay period starts on 23 March 2020 and ends on 29 March 2020. The employee was paid £350 for 23 March 2019 to 29 March 2019. The employee was furloughed for the whole week.
1. Start with £350 (the amount they earned in the same period last year) 2. Divide by 7 (the total number of days in this pay period) 3. Multiply by 7 (the number of furlough days in this pay period) 4. Multiply by 80% - this is £280
When calculating 80% of the average monthly wages for the last tax year:
1. Start with the amount they earned in the tax year up to the day before they were furloughed. 2. Divide it by the number of days from the start of the tax year - including non-working days (up to the day before they were furloughed, or 5 April 2020 – whichever is earlier). 3. Multiply by the number of furlough days in this pay period. 4. Multiply by 80%.
The example below is given:
Worker started work for A Ltd in 2010 and was placed on furlough on 23 March 2020, earning £15,000 between 6 April 2019 and 22 March 2020 inclusive. There are 353 days between 6 April 2019 and 22 March 2020. A Ltd is claiming for 23 March to 31 March 2020. There are 9 days between 23 March and 31 March. 1. Start with £15,000 (the amount they earned in the tax year up to the day before they were furloughed) 2. Divide it by 353 (the number of days from the start the tax year, up to the day before they were furloughed) 3. Multiply by 9 (the number of furlough days in this pay period) 4. Multiply by 80% - this is £305.95
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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