How should an employer calculate pay for an employee who is furloughed on return from maternity leave or other family-related leave?
HM Revenue and Customs guidance on the Coronavirus Job Retention Scheme states that where an employee with fixed pay is furloughed having returned from maternity or other family-related leave, the employer should calculate their furlough pay by reference to their salary, rather than the pay they received while they were on family-related leave.
Neither the guidance nor the HM Treasury Direction on the scheme sets out a specific calculation for employees with variable pay who are furloughed on return from family-related leave. It therefore appears that the method for calculating their furlough pay is the same as for an employee who has not been absent on family-related leave. The employer should calculate their pay using either their earnings from the corresponding calendar period in the 2019/2020 tax year or their average earnings for the 2019/2020 tax year, whichever is higher. Alternatively, if the employee started work after 19 March 2020 and is furloughed for the first time on or after 1 November 2020, the calculation should be based on their average earnings between 6 April 2020 (or the date the employee joined, if later) and the start of the furlough period. Given that an employee could have been on family-related leave for all or most of the relevant calculation period, any of these options could result in the employee's furlough pay being calculated on the reduced pay they received while on leave. It is not clear if this is the intention of the scheme.