furlough

New option – reduced pay

With the coronavirus outbreak affecting businesses around the country, a number of employers have had to make the decision to ask staff not to come in to work. The government announced last week that, to encourage employers not to lay staff off, they will pay up to 80% (to a maximum £2,500 per month) of staff members’ salaries if they keep them on the payroll. As well as trying to ensure that employees still receive some pay, the plan is to keep the workers available so the economy is well placed to start up again once the virus threat is reduced.

I have added an option to the existing Pro-Rata Calculator which allows you to enter a percentage of salary instead of reduced hours. Some employers will continue to pay their employees the full amount during the pandemic, others may only be able to pay what they are receiving from the government. And of course, for other reasons you might be receiving a percentage reduction in salary. If this applies to you, enter your full-time salary and full-time hours, then enter the percentage of your salary that you will be receiving. With tax and pension deductions etc taken into account, you might find that the reduction is not quite as bad as you thought. For example, someone on the UK median full-time salary (which is about £30,000) normally takes home £1,915 per month after tax and 5% auto-enrolment pension contributions. On 80% salary, they would take home £1,595, which is a significant drop but still just over 83% of normal. Other deductions like Student Loan repayment could make the overall reduction to a slightly more manageable 85%.

Also of interest might be the new Sick Pay Calculator, which I launched last week to help people who have had to take a short period of time off on reduced pay.

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None of the content on this website, including blog posts, comments, or responses to user comments, is offered as financial advice. Figures used are for illustrative purposes only.

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