On 18 August the Coronavirus Job Retention Scheme Guidance was updated to give examples of reclaim calculations where an employee will be flexibly furloughed in September and / or October 2020. As from August 2020, in both these months, the employer will not be able to make a reclaim for any National Insurance or pension costs.

The below guidance and documents were updated:

Find examples to help you calculate your employees’ wages

  1. Examples of how to calculate your employees’ wages, National Insurance contributions and pension contributions
  2. Full examples of how to calculate the amount you should claim for an employee who is flexibly furloughed

Further changes also happen in these months, as outlined in HMRC’s Policy Paper dated 01 July 2020.

From 01 to 30 September 2020

The pay that must be paid to a furloughed employee remains 80% of reference pay (capped at £2,500.00).  This is important starting eligibility criteria for the grant.  For reclaiming:

  • The pay grant from HMRC reduces to 70% (from 80%)
  • The cap reduces to £2,187.50 (from £2,500.00)

Therefore, to ensure that the furloughed employee receives the pay for which they must be paid, there is an increased cost to the employer.

An employer cannot just reduce the pay of a furloughed employee to be the same as the pay that they can reclaim.

From 01 October to 31 October 2020

The pay that must be paid to a furloughed employee remains 80% of reference pay (capped at £2,500.00).  For reclaiming:

  • The pay grant from HMRC reduces to 60% (from 70%)
  • The cap reduces to £1,875.00 (from £2,187.50)

Again, an employer cannot just reduce the pay of a furloughed employee to be the same as the pay that they can reclaim.

 

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