HMRC’s new guidance on statutory pay
To ascertain whether an employee is entitled to statutory pay you sometimes need to work out their average earnings. HMRC’s new guidance explains how to do this for furloughed workers. What do you need to know?
Statutory payments: Following a flood of questions from employers HMRC has clarified the position for family-related statutory payments for furloughed workers. Statutory maternity, adoption, paternity, shared parental and parental bereavement pay are involved.
Entitlement: An employee’s entitlement to statutory pay may vary depending on their average weekly earnings (AWE). Where it’s been reduced because they have been furloughed, and you’ve made a corresponding claim under the Coronavirus Job Retention Scheme (CJRS), you may need to work out their pay for statutory pay purposes differently compared with other employees.
Average weekly pay: Where an employee’s entitlement began on or after 25 April 2020 and they were furloughed for part or all of the relevant eight-week period (see The next step ), the earnings you must use to work out their AWE is the greater of the amount you pay them and that you would have paid them had they not been furloughed.
Tip. Where an employee’s pay normally varies, say because of bonuses or commission, to work out their AWE start your calculation with the rate of salary you used to determine how much to claim under the CJRS. Add to this any bonuses etc. which the employee was due to receive in the eight-week period, even if you didn’t pay them.
Pay unaffected: If you have topped up the CJRS element of an employee’s pay so that their earnings during the eight-week period were the same as they would have been had they not been furloughed or you and your employee agreed a reduction in their pay, the AWE figure is worked out as normal.
If an employee’s pay was reduced because they were furloughed, and you made a claim, you must work out their average earnings for statutory pay purposes using their normal pay and not the reduced amount.