Calculating Reference Pay for Employee Paid variable Amounts

Determine the Start and End of the period for relevant earnings


Start Date

Either 6th April 2019 OR the employee’s Join Date (if the Join Date is after 6th April 2019).

Note: The Join Date has to be before the employee’s Furlough Start Date.


End Date

Either 5th April 2020 OR the day before the employee’s Furlough Start Date (if the Furlough Start Date is on or before 5th April 2020).


Deriving Reference Pay

Sum up all ‘regular’ payments made to the employee between the Start Date and End Date that you derived, above.

HMRC’s advice on what to include is as follows:

The amount you should use when calculating 80% of your employees’ wages is regular payments you are obliged to make, including:

  • regular wages you pay to employees
  • non-discretionary overtime
  • non-discretionary fees
  • non-discretionary commission payments
  • piece rate payments

You cannot include the following when calculating wages:

  • payments made at the discretion of the employer or a client - where the employer or client was under no contractual obligation to pay, including:
    • tips
    • discretionary bonuses
    • discretionary commission payments
  • non-cash payments
  • non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay

 

Using Reference Pay to set up Furlough Pay in Qtac

Navigate to the Pay Rates tab in Employee Maintenance.


Monthly Paid Employees

If you are updating a Pay Rate having furloughed this employee already:

  • Multiply the Reference Pay that you calculated in the previous section by 80% and enter this figure in the ‘Per Annum’ field. We recommend switching to ‘Salary’ to simplify this process.


If you have not changed the employee’s status to ‘Furloughed’ yet:

  •  Enter the Reference Pay that you have calculated into the ‘Per Annum’ field. We recommend switching to ‘Salary’ to simplify this process.

Weekly / 2-Weekly / 4-Weekly Paid Employees

If you are updating a Pay Rate having furloughed this employee already:

  • Divide the Reference Pay that you calculated in the previous section by 52. Take this result and multiply by 80%. Enter this figure in the ‘Per Week’ field. We recommend switching to ‘Salary’ to simplify this process.


If you have not changed the employee’s status to ‘Furloughed’ yet:

  • Divide the Reference Pay by 52. Take this result and enter it into the ‘Per Week’ field. We recommend switching to ‘Salary’ to simplify this process.

Final Task!

If you have not set the employee’s status to ‘Furloughed’, navigate to the Personal tab of Employee Maintenance and set the Status to ‘Furloughed’, using our supplementary guidance on how to furlough an employee.


If you have already furloughed this employee, navigate to the Personal tab of Employee Maintenance and ensure that ‘Variable Pay in 1920’ – in the Furlough section – has been checked. In order to perform the calculation correctly, if the employee was paid variable amounts in the previous tax year it is critical that this box is checked.