How should an employer calculate pay for an employee who is furloughed on return from maternity leave or other family-related leave?

Note: The Coronavirus Job Retention Scheme closed on 31 October 2020 and has been replaced by the Job Support Scheme from 1 November 2020. The last date on which employers can submit or amend claims for employees furloughed under the Coronavirus Job Retention Scheme is 30 November 2020.

Employers are required to pay furloughed employees 80% of their normal salary, up to a maximum of £2,500 per month, which they can claim back from HM Revenue and Customs (HMRC). (The employer can top up the employee's salary beyond this.) Guidance published by HMRC on calculating employees' wages under the Coronavirus Job Retention Scheme sets out the rules on calculating pay for employees who are furloughed on their return to work from maternity, paternity, shared parental, adoption or parental bereavement leave.

Where an employee with fixed pay is furloughed having returned from family-related leave, the guidance states that the employer should calculate their pay by reference to their salary, rather than the pay they received while they were on family-related leave.

Where an employee's pay varies, the guidance states that the employer should calculate their pay using either the same month's wages from the previous year, or their average monthly wages for the 2019/2020 tax year, whichever is higher. This is the same calculation as for an employee who has not been absent on family-related leave. Given that an employee could have been on family-related leave for all or most of the 2019/2020 tax year, or during the relevant calculation month, both of these options could result in the employee's furlough pay being calculated on the reduced pay they received while on leave.