How do you calculate the wages of an employee with irregular hours for the purpose of the Coronavirus Job Retention Scheme?

Employers can claim a grant for 80% of an employee's wages, up to £2,500 per month, under the Coronavirus Job Retention Scheme. The employee must be furloughed and do no work for the employer.

To make a claim, the employer must calculate the employee's monthly wages. For an employee with irregular hours who has worked for the employer for a full 12 months before the claim, the employer should use the higher of:

  • the employee's earnings from the same month in the previous year; or
  • the employee's average monthly earnings from the 2019/2020 tax year.

If the employee has not worked for 12 months before the claim, the calculation should be based on their average monthly earnings from the start of their employment to the date they are furloughed.

If the employee has been employed for less than a month, the guidance says the employer should calculate what they would earn in a month based on their pro-rata earnings to date.