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CJRS - is an employee receiving fixed or variable pay?


Published: 11 May 2021 Update History

Whether an employee has fixed or variable pay is a key concept for calculating amounts that can be claimed under the Coronavirus Job Retention Scheme. The Tax Faculty explain that the classification of some employees is essentially the employer’s choice.

On 7 May, tax expert Kate Upcraft joined the Tax Faculty in a webinar explaining how to calculate claims under under the final phase of the Coronavirus Job Retention Scheme (CJRS).

One of the areas highlighted was the issue of whether an employee receives fixed or variable pay.

Where an employee has fixed pay, the calculation of 80% of the employee’s usual wages is made using the wages paid in the last pay period ending on or before their reference date for the purposes of the CJRS.

If an employee receives variable pay, the calculation depends on when the employee became eligible for the CJRS, but generally involves averaging or a calendar look back.

Where an employee has a fixed salary but works a significant amount of overtime, it is the employer’s choice whether the employee should have their usual wages calculated using the method for employees whose pay varies.

Overtime could have a significant effect on the calculation of 80% of their usual wages and it may be beneficial to calculate on a variable pay basis.

This is just one area where HMRC’s guidance has evolved since the launch of the scheme last year, as highlighted by Upcraft in the free webinar which can now be watched on demand.

This particular option first became apparent in an update to HMRC’s guidance on 7 August 2020. Find out what else has changed and get practical advice on calculating claims by watching the webinar in full.

Hear more at Virtually Live!

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ICAEW's flagship digital conference returns for 2021. Virtually Live will be held on 15-17 June 2021
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