Clarification on how to calculate statutory pay for furloughed employees who take family-related statutory leave either during or after furlough leave

Clarification on how to calculate statutory pay for furloughed employees who take family-related statutory leave either during or after furlough leave

Clarification on how to calculate statutory pay for furloughed employees who take family-related statutory leave either during or after furlough leave

With possibly the longest name on the statute books, The Maternity Allowance, Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay (Normal Weekly Earnings etc.) (Coronavirus) (Amendment) Regulations 2020 (SI 2020/450) came into force on 25 April 2020 (the “Amendment Regulations”).

The Amendment Regulations clarify how an employer should calculate the statutory pay to which an employee is entitled if they take statutory family leave if they have been furloughed either currently or in the past.  The Amendment Regulations make it clear that, for the purposes of this calculation, the employee’s “normal weekly earnings” should be based on the pay they would have received, if they had not been furloughed.  HMRC and ACAS have updated their online Guidance and advice to reflect this.

By way of illustration, prior to the implementation of the Amendment Regulations, statutory maternity pay would be calculated on the basis of the woman’s “normal weekly earnings” during the “relevant period” (for monthly paid employees, “normal weekly earnings” would be calculated as a weekly average of the pay received by the woman as set out in her last two payslips before the end of the 15th week before the week in which she is due to give birth).  The Amendment Regulations confirm that, if the woman is furloughed in accordance with the Coronavirus Job Retention Scheme during any part of the “relevant period” and is in receipt of less pay as a result of being furloughed, her normal weekly earnings for the purposes of determining her statutory maternity pay should be calculated on the basis of the pay she would have received had she not been furloughed.

The Amendment Regulations make similar changes to legislation governing the calculation of other forms of statutory pay for family-related statutory leave.

The Amendment Regulations apply to the calculation of statutory pay in relation to a period of statutory leave beginning on or after 25 April 2020.

Comment

The Amendment Regulations provide some welcome clarification in relation to calculating statutory pay for employees on family friendly leave, if they were furloughed during the relevant calculation period.  However, in some cases, it is possible there may still be some uncertainty as to what pay the employee would have been entitled to had they not been furloughed during the relevant period, especially in cases where the employer has implemented pay reductions for employees who have not been furloughed.

 

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