Furloughed Employee Parental Leave: Set Up & Calculation : Qtac Solutions Ltd

This section will show you how to set up and calculate parental leave for employees on Furlough

If the employee is not on Furlough, please click here for our Absence Recording: Maternity / Paternity article.

You can access ‘Absence Recording’ by highlighting the employee name on the payroll home-screen. Then select the ‘Employee’ menu along the top of the software and choose ‘Absence Recording’.

Parental Pay after furlough

Workers who are taking paid parental or adoption leave after being furloughed will be entitled to pay based on their normal earnings rather than the pay received under furlough.

The Qtac software calculates the Average Weekly Earnings (AWE) using earnings paid 15 weeks before the expected date. If the employee was paid whilst under furlough during this time, the calculation may be incorrect and their payments will need to be changed manually.

Manually calculating the first 6 weeks of SMP

If your employee received furlough pay during any part of the relevant 8 week period, there are different rules about how you work out their Average Weekly Earnings (AWE).

This is to make sure your employee’s eligibility for SMP and earnings-related rate of SMP is not affected if their wages are lower than normal because of being furloughed.

The earnings used to work out their AWE for the part of the 8 week period that they were furloughed will be the higher of either what they:

actually received from their employer
would have received from their employer had they not been on furlough

The guidance above is supplied by HMRC and for further information please see: https://www.gov.uk/guidance/statutory-maternity-pay-employee-circumstances-that-affect-payment

HMRC also supply a calculator on their website, which can be used to calculate the AWE https://www.gov.uk/maternity-paternity-calculator

Setting up Parental Leave

To set up Parental Leave you must first:

Select the employees name down the left hand side of the payroll.
Go into ‘Employee’ > ‘Absence Recording’.
Click the ‘Add New’ button.
Select the relevant absence from the ‘Order Type’ drop down box.
Enter in the expected date of the baby into ‘Expected Date’.
Enter in the day they are leaving to go on maternity leave in the ‘Leave Start’ box.
Set the ‘Basic Pay Adjustment’:
- Reduce Standard basic pay by Statutory Pay: This option reduces the basic pay by the absence amount, thus giving you the same gross total pay, just a combination of absence and ‘Basic Pay’.
- Do not Pay Basic Pay: This option will clear the employees ‘Basic Pay’ to 0.00, leaving only the automatically calculated absence amount.
- Pay Basic Pay as entered: This option allows you to pay whatever you want to the employee in ‘Basic Pay’.
Finally, click ‘Save’.

Remember that if the ‘Leave Start’ date for the absence is mid-week, the absence won’t take effect until the week after as a full 7 day week is required before it can take effect.

Paying the furloughed employee on Parental Leave

When opening & paying the employee, the absence will be automatically calculated however if the Qualifying Week as mentioned above is within the employee's furlough pay the employees Average Weekly Earnings will be a lower amount.

To amend the values you will need to.

Navigate to Employee > Open and Pay Employee
Select Change
Select Absence Recording tab

On the Absence Recording, a table of absences will appear showing the Absence Type, Start Date, End Date, and Amount. To amend the value you will need to select the row and the selected row will the show below the table. You now have the ability to change the value to the amount you have calculated.