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Pay cut during Furlough, how does that work?

7 replies

notagaincharlie · 10/04/2020 09:55

My dd, who started her first proper job last Autumn, has been furloughed, which is understandable. However, she's been contacted by the company to say all staff are having to take a pay cut as of April 1st of between 10 and 20%.

From what I can see, the furlough scheme looks back to your salary as at the 28th Feb this year. Will her furloughed amount be 80% of the Feb salary or the new salary? It's a pretty small private company with no real HR department.

I'm being very suspicious here, but is there a chance they could claim 80% of her Feb salary and just pay her 80% of her post April salary?

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notagaincharlie · 10/04/2020 10:12

Has anyone else experienced this?

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WouldShouldCould · 10/04/2020 10:17

Still no complete guidance but yes it looks like she should get 80% of her Feb salary or the average of her earnings over the previous year.

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VanGoghsDog · 10/04/2020 10:52

You're right that they could claim it and not pay it to her

She should write to them explaining that her salary as at 28th Feb is x and she expects 80% of that.

She does not have to agree to a pay cut, they can't impose it.

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notagaincharlie · 10/04/2020 12:37

Thank you so much. It's awkward as she's only young and her boss is quite 'imposing'. I'll try to word a letter for her.

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notagaincharlie · 10/04/2020 14:00

I also think they have to apply for furloughed staff every three weeks, but I can't see the benefit of them reducing her salary as the govt are paying 80% and they are not topping up at all. I guess under the lower salaries they would pay less NI or something.

Just seems a bit weird to slap a pay cut in now when it won't make a difference to them.

This is a basic job that doesn't go over the £2500 limit or anywhere near it.

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VanGoghsDog · 11/04/2020 01:43

Govt covers the NI and pension cost on top of the 80%. So no gain there.

I guess they probably think they can bring people back later and maintain the lower pay rate. It doesn't take her under minimum wage does it?

Do send a letter, it's entirely possible the firm has simply misunderstood the scheme or mis worded the letter.

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notagaincharlie · 11/04/2020 08:11

I think that might be it, bring them back at a lower salary to save the company. The pay cut is open ended so she's going to have to wait to get back to her starting salary.

Seems shitty timing though....

Thanks for all your comments