If an employer has formally furloughed an employee then the employee will be entitled to 80% of his or her ‘salary’. If it is a fixed salary then it will be based upon what was paid in February (excluding fees, commission or bonuses). Where the employees pay varies and has been employed for a full 12 months, the employer can claim the higher of:
- The same month’s earnings from the previous year or
- The average monthly earnings of the 2019/20 tax year. If employed only part way through the 2019/20 tax year you can average that period instead. If the employee has been taken on part way through February then the employer uses a pro-rata of their earnings so far to make the claim.
HMRC, subject to a claim being made and the furlough arrangement being in place, should pay across the 80% furlough salary agreed between the employer and the employee plus the element of employers NI and the employers auto enrolment pension contributions. The employer can, of course, pay the employee the full salary as originally contractually obliged to do so. That is up to the employer. The government will only pay across to the employer the 80% plus the respective NI and pension contributions.