The NFDA has taken legal advice from TLT to interpret the latest guidance for the Government Job Retention Scheme, which we have as follows:
The language in the updated guidance has changed from the original, which as you know expressly excluded any commission or bonus payments. The guidance refers to the grant covering 80% of the “employees usual monthly wage costs” and now expressly includes “regular payments you are obliged to pay”.
The language used in the amended guidance is that any contractual payment can now be included in the furlough pay calculations. It is simply any discretionary payments that should be excluded, this is understandable as an unscrupulous employer could award large discretionary bonuses to staff during furlough when they were not otherwise due, and reclaim them. As the purpose of the scheme is to replace 80% of the employee’s lost “income” in the broad sense, then it makes sense. This was the point represented to government in the NFDA letters, that an employee’s real earnings are included.
We think that it is clear that the furlough pay can and indeed should include contractual commissions and bonuses that form part of the employee’s “regular payments” that the employer is obliged to pay.
It is, though important to note that as the grant arrangement is yet to be set up, and no employers have yet had applications for payment processed or made, there is no guarantee that the government will pay out any particular sums. However in light of this new guidance it seems impossible for them to argue that normal contractual entitlements to bonus/commissions are not included in the grant.
If you would like further information please contact us.
