Docked furlough pay because of holidays taken last year?

[Giespeace]

I’m a weekly paid worker, and I queried some missing money from my furlough pay last week. My employer just got back to me this evening stating that this was because I took a days holiday in week 4 last year.
Is this right? I just won’t be paid at all in a few weeks time because I took a weeks annual leave last year, effectively meaning I’m being made to repay last years holiday pay?

I’ve just had a fight with them to get them to pay me the higher of the same week last years pay or my average earnings for the year (I was on maternity from last July until the start of March) and I can’t believe it’s now my legal annual holiday entitlement that’s being held against me

Well, the guidance on furlough pay says "The entirety of the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme."

However I don't think it's clear whether deductions can be made in respect of other monies owed. No doubt there will be some case law in due course.

I think the better place to focus is on whether this deduction is correct in the first place, rather than whether your employer can make it during furlough. If you owe them the money and it is a legitimate deduction but they can't make it during furlough, they'll make it at some point.

Did you take too much holiday last year? Do you have records of how much holiday you took and how much you accrued in order to compare and see whether this deducted money is correct?

Thanks for replying!
I have checked all the payslips from last year up to week 12 and made a note of the holiday pay each week. I’m fairly certain my holidays were all ok last year as payroll just paid the first few weeks of my maternity leave using those up.

The email I received from HR states they they cannot pay furlough based on holiday pay, full stop. Only regular pay can be used. I understood holiday pay to be under the umbrella of non-discretionary contractual payments as the government guidelines describes, rather than bonuses/commission/non cash benefits etc. It seems HR have either interpreted guidelines differently or are looking at different guidelines entirely (as was the case regarding my maternity pay, as it turns out).

Oh that's something completely different - you were saying your pay had been docked, as in they'd made a deduction from it in respect of holiday.

You need to think of holiday as time off, not as extra pay. If you received pay in one week for holiday taken in another week, that isn't inflating your pay for week one.

So if you get paid, say, £70 per day and work 5 days a week, your pay they should be basing the calculation on is £350. If, in that week, you actually received an extra £70 for a day's holiday you took/will take at another time, that doesn't mean your pay for the week is £420.

I think I worded the OP wrongly.

I took one days holiday in the corresponding week last year. I was paid holiday pay at the normal rate for this. Because of this, they have discounted one day from my furlough pay for that week this year. So have paid me 80% of 4 days pay, rather than 5.

My concern is that
A) holiday pay isn’t a bonus
B) I took all of my annual leave early last year so won’t be paid any furlough for that time (assuming furlough continues over the summer) whereas if it had been processed later in the year I wouldn’t be heavily penalised this year for taking it.

So you work four days a week normally, and in that week you happened to be on annual leave for one day of it rather than in the office?

No they shouldn’t be doing that.

I work 5 days normally. Full time contract of 39.5 hours, statutory annual leave entitlement to match.

I can’t seem to find any sources online regarding this that I can go back to HR with to press them further. I can’t be the only person affected by this - unless my company really are at it. Are you aware of any sources?

It just seems like it just cannot be right that if a person took annual leave last year, as per their contractual and legal entitlement, that this is now treated as a bonus and discounted for furlough. It’s as if it’s so obviously wrong that the government website doesn’t even cover it.

I thought furlough was paid at your salary and term and conditions as they stood in March this year, not a full calendar year ago?

Ok well if you work full time same pay each week your furlough pay should be based on your last pay period before 19 March this year, simple as that. Whether you were on holiday at any point during that pay period doesn’t matter, it’s what you got paid.

Sources are the Treasury Direction and the HMRC guidance, both of which are very clear how to calculate furlough pay.

I’m hourly paid so it’s classed as variable pay. Hence the “higher of average earnings over the year OR the same pay period last year” comes into play.

It’s not classed as variable pay unless it’s actually variable!

Should they not be basing earnings on the pay period prior to 19th March 2020?

Employers should normally base their claim for the 80% of a salaried employee’s wages on the employee’s last pay period prior to 19 March 2020

I assume if you are weekly paid that you would have had normal pay between returning to work and the above date

It's not variable unless your weekly hours vary and that makes your wages vary each week. If you work the same hours each week at the same hourly rate then it's not variable as you would always get the same amount.

Your employer sounds a bit shit tbh

So just had a look at the Treasury Direction as you advised @flowery.

In calculating the employee’s reference salary for the purposes of paragraphs 7.2 and 7.7, no account is to be taken of anything which is not regular salary or wages.
7.4 In paragraph 7.3 “regular” in relation to salary or wages means so much of the amount of the salary or wages as-
(a) cannot vary according to any of the relevant matters described in paragraph 7.5 except where the variation in the amount arises as described in paragraph 7.4(d),
(b) is not conditional on any matter,
(c) is not a benefit of any other kind, and
(d) arises from a legally enforceable agreement, understanding, scheme, transaction or series of transactions.
7.5 The relevant matters are-
(a) the performance of or any part of any business of the employer or any business of a person connected with the employer,
(b) the contribution made by the employee to the performance of, or any part of any business,
(c) the performance by the employee of any duties of the employment, and
(d) any similar considerations or otherwise payable at the discretion of the employer or any other person (such as a gratuity).

Is it up to the employers discretion whether they consider holiday pay to be a regular payment? It’s certainly not conditional on performance or anything like that...

I’m classed as variable paid because I’m not salaried. If I stay an extra 20 minutes because a meeting overran then I’m paid for that - apparently this counts as me having “opportunity to earn overtime”.

@dementedpixie

I know, I’m so disappointed in them. They are emailing us all updates about all the money they are donating to local charities because we are all in this together - meanwhile they are happy to arbitrarily not pay their workers.

Anyone? The main question is whether holiday pay can be considered part of your regular pay for the purposes of reclaiming furlough, or is my employer correct to class it as a bonus type payment?

Surely its pay you're entitled to by law, so not discretionary.

I have included holiday pay in my calculations for our hourly paid workers. It’s a contractual and legal entitlement to have paid time off work.

It’s very unfair of them not to include it.

Holiday is not pay it is time off. Your employer should be looking at what you were paid at the relevant time, not whether you were in the office or not.

There is nothing in any of the guidance I have referred you to suggesting that calculations should be reduced for times the individual was on annual leave.

Thank you! It’s good to know that someone in the real world is including it as part of that weeks wages when calculating furlough.
I’ve not been able to find much on this specifically which is leading me to believe that there can’t be that many people being treated like this.
I feel better about the email I have drafted asking HR to confirm that they now consider statutory paid annual leave to be a discretionary bonus rather than a regular contractual obligation. I don’t see how I can fight them further without an official source that states in black and white “of course last years annual leave doesn’t affect furlough payments you moron”. I think they are going to wriggle and squirm about different ways the guidelines could be interpreted.

This paragraph implies that holiday pay should be included.

“Unpaid sabbatical or unpaid leave
If your employee has been on unpaid sabbatical or unpaid leave, you’ll need to use the amount they would have been paid if they were on paid leave when calculating 80% of their wages.”

There is a whole section on holiday pay but only in relation to being paid or accruing holiday whilst on furlough.

I personally feel it’s not there in writing because it’s obvious it should be included but that doesn’t help you.

The problem is that furlough isn’t a statutory entitlement. The conditions on it are between HMRC and your employer. The framework governing how much you get paid is your contract with your employer, including what was specified in your furlough agreement letter.

The furlough terms set out how much an employer can claim, and that it must all be paid to you.

If they choose to claim less than they are entitled to claim, it’s not at all clear that you have a specific claim about that.

What does the letter putting you on furlough actually say?

@flowery
My furlough letter just says “you’re going on furlough, looks like you’ll get 80% of your gross wages, we aren’t sure what’s going on yet as the government hasn’t come up with all the rules yet”. Nothing specific, nothing agreed, and certainly nothing signed.

@Comefromaway

Where does that quote come from please? I agree with your interpretation there. It all just seems so obvious.

@Comefromaway
I just found that information in the Treasury Direction and it only refers specifically to fixed rate salaried employees