SALES workers who earn commission should be able to have this included as part of their wages if they've been furloughed.
Under the government's coronavirus jobs retention scheme employers can furlough staff if they can't work during lockdown but they want to keep them on the books for once the crisis is over.
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During the furlough period, the government will cover the cost of 80 per cent of workers wages up to £2,500 a month.
Where this gets complicated is for those who don't get a set salary – for example, if you work in sales and earn commission on top.
But HMRC has confirmed there are some scenarios where commission will count towards your furloughed salary.
Here's what you need to know.
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Will commission count towards my furloughed salary?
Whether commission counts towards any furloughed payment depends on whether it was written into your contract that your employer had to pay you commission.
If your employer is contractually obliged to pay you commission you can claim it, but if it's not part of your contract, for example you're paid ad hoc tips from customers as a waiter, you can't claim for it.
HMRC says the following scenarios count under furlough:
- regular wages
- non-discretionary overtime
- non-discretionary fees
- non-discretionary commission payments
- piece rate payments – where you're paid per item manufactured, for example
But you can't include the following payments made at the discretion of your employer or your client in your furlough wages:
- discretionary bonuses
- discretionary commission payments
- non-cash payments
- non-monetary benefits, such as benefits in kind eg, a company car, and salary sacrifice schemes eg, pension contributions, that reduce an employees’ taxable pay
Any grant given under furlough must be paid in money, and payments can't siphoned off to cover the provision of benefits or a salary sacrifice scheme – your employer is expected to pay this on top.
Employers can, however, claim to the furlough scheme for employer auto-enrolment pension payments up to the minimum rate set by the government, as well as employer national insurance contributions.
How will commission count towards my salary?
The other issue with commission payments is that they're likely to vary from month to month or from year to year.
So how these are calculated for furlough purposes depends on when you were employed.
If your pay varies and you were employed before April 6, 2019 and worked for the whole of the 2019/20 tax year you can claim the highest of the following:
- 80 per cent of the same month’s wages from the previous year (up to a maximum of £2,500 a month)
- 80 per cent of the average monthly wages for the 2019/20 tax year (up to a maximum of £2,500 a month)
If your pay varies and you were employed after April 6, 2019, your boss can claim 80 per cent of your average monthly wages since you started work until the date you are/were furloughed.
To help you out, we've rounded up 13 things to know if you’ve been furloughed, including what happens if you go on maternity leave and when you’ll be paid.
Plus, Judge Rinder answers some of your most common queries on employment during the corona crisis.
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