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How Do I Calculate Furlough Payments?

Posted 5 months ago

How Do I Calculate Furlough Payments?
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With the Chancellor having recently extended the Coronavirus Job Retention scheme until October 31, we show you how to calculate furlough payments in line with the change in the rules. 

As an employer you can now bring previously furloughed employees back to work part-time.  You will have to pay their wages for the time they’re in work, but can apply for a grant to cover any of their hours that they are still furloughed for. 

From August, employers will have to start paying their employees’ National Insurance and pension contributions, while from September, the government will pay 70% and employers will pay 10% of employees’ wages for the time they are being furloughed. 

From October the government will pay 60% and employers will pay 20% of employees’ wages for the time they are being furloughed. Employers will also pay their National Insurance and pension contributions.

Before calculating furlough payments, employers should first check that they are eligible under the scheme. 

Employers will also need to decide the length of their claim period, and decide on employee working hours if the decision is made to flexibly furlough staff.

Once these checks have been carried out, employers will then be able to calculate their employees' wages before making a claim.

Changes to the furlough scheme

July

August

September

October

Government contribution: employer NICs and pension contributions

Yes

No

No

No

Government contribution: wages

80% up to £2500

80% up to £2500

70% up to £2,187.50

60% up to £1875

Employer contribution: employer NICs and pension contribution

No

Yes

Yes

Yes

Employer contribution: wages

10% up to £312.50

20% up to £625

Employee receives

80% up to £2500 per month

80% up to £2500 per month

80% up to £2500 per month

80% up to £2500 per month

How to calculate furlough payments

According to the Government, when calculating your employee's furlough payments, you need to look at the regular payments you make. This includes:

  • regular wages paid to employees
  • non-discretionary payments for hours worked, including overtime
  • non-discretionary fees
  • non-discretionary commission payments
  • piece rate payments

To calculate furlough payments, you can use the online calculator here, which can be used to calculate pay for most employees. Further details, including examples of how wages are calculated can be found on the following website.

Authors: Oliver Murphy & Sacha Bright

Disclaimer

To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed.

Tagged: sme business coronavirus entrepreneur



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