Calculating Furlough Pay After a Salary Increase

Posted in : Seamus Says - Employment Law Discussion on 6 November 2020
Seamus McGranaghan
O'Reilly Stewart Solicitors
Issues covered: Calculating furlough pay

Q: We have previously calculated 80% of pay as at the 28th of February. Now it's extended and people who went on furlough can be on it, or who weren't on it. Is it 80% of the current salary? There was a salary increase or change between February and 23rd of September. Do we calculate it based on the new most recent salary? Is that kind of implied by the people who have variable hours and therefore, it goes up and down that you would get a salary as opposed to whatever it was back in February?

Seamus: Yeah, I mean there is clear guidance as to how that should be calculated within the guidance. But one thing that would come to my mind would certainly be that I know that there would have been a lot of increases that could . . . particularly, like if you think around the increases to the national minimum wage in April time and the previous guidance had said that you worked . . . the calculations were based on payment dates, I think, from February time. And therefore, when you were calculating furlough you weren't calculating on the basis of those new rates.

And as regards, where we're at now, I think if you are putting somebody on to furlough at this point, my big sort of gut feeling on that would be that you have to calculate on what exactly their salary is at this moment in time. But again, that may be subject to clarification that they'll get in a week or so from the government. But certainly, if you provided for the increase in national minimum wage, and you were putting somebody under furlough now, I would have thought it's at the rate now and not what it was back in February. But for anyone that has been on furlough and that you're simply just extending it either on furlough or flexible furlough, it may be that you're working off those old figures from February, and I think we'll need to see what the clarification is next week.


This article is correct at 06/11/2020

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Seamus McGranaghan
O'Reilly Stewart Solicitors

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