Calculation for employees whose pay varies, who started employment after 6 April 2019
For employees who started employment after 6 April 2019, the claim should be made for 80% of their average monthly wages since they started work until they date they were furloughed, up to a maximum of £2,500.
To work out 80% of the employee’s average monthly earnings:
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 they’ve been employed since 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%.
Every day or period after the employee commenced employment with the employer is used in this calculation, including days when no work was undertaken.
The following example is provided:
Employee started work for A Ltd in 1 May 2019 and was placed on furlough on 23 March 2020, earning £15,000 between 1 May 2019 and 22 March 2020 inclusive. There are 327 days between 1 May 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 327 (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 £330.28
Calculating employer National Insurance (NI) contributions to claim
Claims can be made for all or some of the Class 1 employer NI contributions paid on the gross pay grant that is paid to an employee.
If an employee’s salary is topped up over the amount that will be covered by the grant, then the employer NI contributions on any additional top-up salary cannot be reclaimed through the scheme.
Calculating what you can claim
The total grant for employer NI contributions cannot exceed the total amount of employer NI contributions that are due to be paid.
When calculating the total employer NI contributions paid in any pay period, the employer should subtract any Employment Allowance used in that pay period. If there is no employer NI contribution to be paid as a result of the Employment Allowance in a pay period, then no claim should be made for any employer NI contribution costs for furloughed employees in that pay period. If it is expected that any Employment Allowance will be exhausted in a pay period, then the lower of the employer NI contributions grant calculation, and the employer NI contributions costs that were paid, or are expected to be paid across an entire payroll should be claimed.
The total employer NI contributions due in a pay period should be apportioned on a daily basis, with the amount apportioned to any qualifying furlough days forming the basis of the amount that can be claimed through the scheme.
Calculating employer NI contributions if an employee is furloughed for a whole pay period, and their pay is not topped up
To calculate the amount of employer National Insurance contributions that can be claimed for:
1. Start with the grant figure being claimed for employee wages 2. Deduct the relevant secondary NI contributions threshold 3. Multiply this amount by 13.8%
Tax year
NI contributions thresholds
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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