- The Pay for furloughed workers taking family related leave is to be calculated based on usual earnings rather than furlough pay
- full earnings will apply to Maternity Pay, Paternity Pay, Shared Parental Pay, Parental Bereavement Pay and Adoption Pay
- ensures workers about to take family-related leave are not penalised by being furloughed
Government announced (24 April 2020) that Furloughed workers taking parental or adoption leave will be entitled to pay based on their usual earnings.
Entitlement is currently calculated on average earnings over an 8-week assessment period. For Maternity Allowance, entitlement is determined by looking at average earnings over a 13 week period.
The statutory instrument ensures workers whose period of family-related pay begins from 25 April will be assessed on their full pay and will not see their entitlement affected as a result of being furloughed in the wake of COVID-19.
Business Minister Paul Scully:
Maternity and other forms of parental leave are pivotal times in people’s lives, and they should absolutely be protected from the impacts of COVID-19.
We are supporting workers and businesses in a way never seen before, in response to the unprecedented effects of COVID-19. These measures will ensure those on the Coronavirus Job Retention Scheme continue to receive the parental leave and pay they are entitled to.
Lords Minister for the Department for Work and Pensions, Baroness Stedman-Scott said:
At an already challenging time for families, peace of mind that they can rightly take time off and receive their full entitlement will provide much needed reassurance.
Throughout this health emergency we’ve taken unprecedented steps to help those affected make ends meet, and today’s new measures further extend vital financial support.
Pregnant women and new mothers are entitled to take up to 52 weeks of Maternity Leave. Up to 39 weeks are paid. For women who qualify for Statutory Maternity Pay (SMP), this is paid at 90% of usual earnings for the first 6 weeks, followed by 33 weeks at the statutory rate (currently £151.20). Adoption Leave and Statutory Adoption Pay (SAP) are the same.
Maternity Allowance is a benefit paid to working mothers who do not qualify for SMP – this is worth up to £151.20 a week for up to 39 weeks.
Statutory Paternity Pay is up to 2 weeks long and is paid at the lower of £151.20 per week, or 90% of average earnings.
Shared Parental Pay is up to 50 weeks long and is paid at the lower of £151.20 per week, or 90% of average earnings.
Statutory Parental Bereavement Pay is 2 weeks long and is paid at the lower of £151.20 per week, or 90% of average earnings.
To be eligible average weekly earnings must be at least equal to the Lower Earnings Limit (currently £120 per week) over a prescribed 8-week test period.
Payroll consideration and thoughts from PAYadvice
Average weekly earnings are traditionally based on paid earnings for Class 1 National Insurance.
During furlough the Class 1 earnings may have been reduced to a lower value of earnings than normal. This would impact the automated average weekly earnings for statutory payments.
For furloughed employees that where reduced earnings impact the average earnings period, employers and payroll will need to monitor and adjust calculations to ensure that the correct higher rate is derived and paid.
It could be viewed that at the end of furlough a pay rise has taken place which could be considered to fall under the Alabaster ruling in relation to pay rises and maternity.