09 Jul Average Weekly Earnings, Maternity & Parental Pay & Furlough
Average weekly earnings, Maternity or Parental Pay & Furlough
There are slight changes made to the calculation of Average Weekly Earnings for furloughed employees. If you have a staff member who is due to start any kind of parental leave then please read on about the average earnings calculation.
If your employee was on furlough and you paid them with help from the Coronavirus Job Retention Scheme (CJRS) during any part of the relevant 8-week period, there are slightly different rules about how you calculate their Average Weekly Earnings (AWE) if they are due to start a period of family-related statutory pay on or after 25 April 2020.
This is to ensure your employee’s:
- eligibility for Statutory Maternity Pay, Statutory Adoption Pay, Statutory Paternity Pay, Statutory Shared Parental Pay, or Statutory Parental Bereavement Pay; and
- earnings-related rate of Statutory Maternity Pay or Statutory Adoption Pay are not affected if their earnings are lower than normal as a result of being furloughed.
These different rules will only apply where the employee’s period of family-related statutory pay begins on or after 25 April 2020.
If your employee was on furlough for part or all of the relevant 8-week period, the earnings used to calculate AWE for that period will be the higher of:
- What they actually receive from their employer; or
- What they would have received from their employer had they not been on furlough
Where it is not clear what the employee would have received had they not been on furlough, a helpful starting point is likely to be the reference salary which is used to determine how much you claim through the CJRS. However, you should also consider any bonus payments, commission payments, or other payments which would have qualified as earnings and which the employee was due to receive in the relevant period.
If you are claiming your employee’s wage costs (the lower of 80% of their reference salary or £2500 per month) through the CJRS but you are topping up their wages to full pay at your own cost, no change will be required as the employee’s earnings will not be lower than they would have been had the employee not been on furlough.
Similarly, no change will be required where, as a result of the coronavirus crisis, you and your employee agreed a reduction in their pay during the relevant period outside of the Government’s CJRS.
It all sounds very complicated, why not get in touch with EA Assist. We have a wealth of experience in payroll, statutory pay and now furlough so please give us a call.
There are a selection of HMRC’s Basic PAYE Tools available – click here to find out more or you can get in touch with EA Assist.
We can provide a bespoke payroll service tailored to suit you. Whether you have 1 employee or 100 employees we can help with calculating all salaried and paid workers, either working or on furlough. We know all about Maternity, Paternity, Statutory Sick and we’ve learnt fast about furlough.
To find out more about our out-sourced payroll service visit our website or get in touch to find out just how easy and efficient it is to let someone else take the burden of payroll.