Salary & Salary Hours

My client wants to know if they can calculate reference salary and salary hours. What do they have to keep in mind when making these calculations?

Further guidance on the extended Job Retention Scheme (JRS) was recently released covering your client’s query.

My client should keep in mind that for employees to be eligible to have their wages claimed for under the extended JRS, they must be on an employer’s PAYE payroll by 23:59 30 October 2020. This means that your client must have made a Real Time Information submission notifying payment for their employees to HMRC between 20 March 2020 and 30 October 2020.

My client will need to calculate their employees’ reference salary in order to determine what 80% of it is. When employees are on flexible furlough, it will also be necessary to calculate what their usual hours are so you can record both working and furloughed hours.

For employees on fixed pay, employed on or after 20 March 2020, the last pay period prior to 30 October 2020 provides the basis for calculation. For employees on variable pay or hours, employed after 20 March, the average of tax year 2020 to 2021 up to the start of the furlough provides the basis for calculation.

For employees that meet the eligibility criteria, and were previously furloughed, my client must use the same calculations for calculating reference pay and usual hours as the original JRS.
For an employee who meets the criteria of the extended scheme, but was not previously eligible for JRS, alternative calculations of reference pay and usual hours must be used. Here, 80% of wages (subject to the £2,500 cap) must be calculated for employees, as follows:

  • on a fixed salary – 80% of the wages payable in the last pay period ending on or before 30 October 2020
  • whose pay varies – 80% of the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their JRS extension furlough periods begins

My client should be aware that these dates are inclusive.

If an employee was not previously eligible for JRS and works fixed hours or their pay does not vary according to the number of hours they work, their usual hours will be the contracted hours worked in the last pay period ending on or before 30 October 2020.

If an employee was not previously eligible for JRS and works variable hours, their usual hours will be the average hours worked between:

  • the start date of the 2020 to 2021 tax year, (for example, 6 April 2020)
  • the day before their JRS extension furlough periods begins

Again, these dates are inclusive.

It is essential that my client familiarise themselves with this as much as possible and regularly check it for updates, including updates on the scheme as a whole.




A client is concerned about how they will cope financially next year with the annual National Minimum Wage increases. Is it likely that the Government will introduce further measures to help businesses meet the rising costs? Or are there any other updates regarding this which can help the client?

It is unlikely that the Government will introduce measures to assist businesses in meeting rising cost or costs which are already in place with regards to the National Minimum Wage (NMW) and National Living Wage (NLW). However, a report by the Sunday Telegraph suggests that the Government may be considering scrapping the annual increase of the NMW and NLW next year – being referred to as an ‘emergency break’.

This is usually increased in April of every year with the year 2020 seeing the biggest increase thus far.

This news comes as the coronavirus’ impact on the financial stability of many businesses raises questions as to whether these businesses, such as my client’s, will be able to afford wage increases. It is likely, according to the newspaper, that Chancellor Rishi Sunak will be making the announcement in the upcoming Budget this Autumn.

In the fourth quarter of 2019, the Government pledged that it would increase the national wage to reach “60% of median earnings in the next four years.” However, the Low Pay Commission – an organisation which gives the Government advice on minimum wage uprating – has stated that the Government may have to withdraw from this plan in order to help businesses economically recover.

The Chair for the Low Pay Commission, Bryan Sanderson, has said that: “There are not many winners in today’s uncertain world. Our contribution to help steer a path through the complexity will be to provide a recommendation founded on rigorous research and competent analysis which has the support of academics and both sides of industry.”

On the other hand, the Trade Union Congress (TUC) has raised the point that an ‘emergency break’ would be the wrong move, especially for key workers who have not stopped working, even during the peak of the pandemic. Frances O’Grady, General Secretary of the TUC went further to say that rates should be increased to reflect the ‘real living wage’ – £10.75 per hour for those working in London, only being paid on a voluntary basis by approximately 6,000 organisations.

There is no doubt that my client’s business would be positively impacted if the Government were to implement this ‘emergency break’, as it will mean that compulsory pay rises will be less likely and organisations in financial difficulty will have less things to worry about and can focus on getting over the coronavirus hump. However, the TUC’s argument may be persuasive enough to dissuade the Government.

Despite this news, my client should keep in mind that, whilst many organisations have spoken on this issue since the news story broke on the morning of 7th September, the information has not come directly from the Government, or any of the Ministers within Parliament, so they need not rely on it. However, they can, and should, prepare for any possible outcome.


A client wants to take advantage of the Kickstart Scheme because they heard in July that the Government would pay them to take on 16-24-year-old “Kickstarters”. Is this correct, and what are the other details the client needs to know – including the number of participants they can hire?

The Kickstart Scheme was indeed announced by the Chancellor in July 2020 as part of his “Plan for Jobs” initiative. It is aimed at creating new high-quality jobs to help 16-24-year-old unemployed people on Universal Credit who are at risk of long-term unemployment. Applications opened on 2nd September 2020 and will be open until December 2021, with the option of it being extended. The first placements are likely to be available from November 2020.

If my client is to take on participants, they will receive funding from the Government to cover some employment costs, including wages.

The Government will pay employers £1,500 towards setting up support and training for those on the Kickstart placement. This payment can also be used to pay for uniforms and other necessary start-up costs. The scheme will also cover 100% of the relevant National Minimum Wage (NMW) for 25 hours’ work per week, as well as employer National Insurance contributions and employer minimum auto-enrolment pension contributions.

Currently, the hourly NMW rates are:

  • Ages 16 – 17: £4.55
  • Ages 18 – 20: £6.45
  • Ages 21 – 24: £8.20

Employers will be able to top up the payment, but the excess will not be covered by the funding.

With regards to the number of “Kickstarters” my client can hire, the published list of minimum requirements stipulates that at least 30 placements must be offered, which should be new and not a replacement of an existing job or cause current staff to have a reduced workload. Other minimum requirements include:

  • being an existing company/organisation with a track record of fiscal competence
  • being prepared to offer at least 25 hours a week to participants, for at least 6 months, who are paid at the appropriate NMW for their age group
  • demonstrating at application stage what employability support employers will provide to
  • participants to give them the transferable skills needed to continue into gainful employment, training, or education
  • demonstrating that the jobs they are offering are quality placements – both “meaningful” and “suitable” – that will benefit the participant in future
  • showing how they plan to monitor the progress of participants to the satisfaction of the compliance and quality requirements for the scheme
  • showing how publicity activities, such as branding, will comply with the DWP publicity requirements

If my client is unable to offer 30 job placements, they can partner with other organisations to reach the minimum placement requirement. A representative of the group must then be nominated, who will check that all job placements are eligible for the scheme and submit the application on the group’s behalf. Applications can be made via the government website.

HR Expert – Vegan Employees

My client wants to know if they need to do anything, in particular, to support vegan employees at work?

Veganism seems to have become more widespread in recent years, with a growing number of individuals opting for a plant-based diet free from animal products. Although individuals’ dietary choices may not necessarily be high up on employers’ list of concerns, it is admirable that my client is considering the support they offer to vegan employees in the workplace.

After all, a tribunal judge has recently suggested that that veganism could qualify as a philosophical belief under the Equality Act 2010 in the future, stating their opinion that the belief consisted of ‘clear cogency and cohesion’. Under the Act, a philosophical belief will receive protection so long as it is genuinely held, is about a substantial aspect of human behaviour and is worthy of respect in a democratic society. Because of this, it may be that, in the future, individuals are protected from discrimination and harassment that is based on their veganism.

Therefore, to ensure that my client’s workplace remains inclusive for vegans, some thought is required. For example, as vegans abstain from the consumption of animal products, your client should pay close attention to the food on offer in any staff canteen or pre-arranged business lunch, ensuring there are always vegan options available.

My client should reconsider if any dress codes require vegans to wear items made from animal products, such shoes or belts made of leather, as doing so could potentially place them at a disadvantage. If so, my client should consider the materials used in uniforms and ensure that they do not pose a problem for vegan employees.

Specific tasks allocated to vegan employees may need to be adjusted if it would make the employee feel uncomfortable. For example, asking a vegan to design a marketing campaign for a butchers shop may not be appropriate.

As with all protected characteristics, employers should have a zero tolerance stance towards bullying and harassment of vegans and deal with any complaints swiftly and seriously. Anti-harassment training should be conducted by all employers to ensure employees are aware of what counts as unacceptable behaviour.

Overall, my client should look to create an inclusive workplace that does not marginalise any employee, regardless of their beliefs. By following this approach, they will reduce the likelihood of any issues occurring relating to veganism and allow staff to continue to perform at their best, without feeling hard done to at work.

HR EXPERT: Government Pledge Living Wage Increase

Whilst some employers may have been surprised by the Government’s announcement to increase the National Living Wage, it is important that my client understands that it will not be taking place immediately. A phased approach will be used to implement higher rates over the course of the next 5 years. This was the pledge made by Chancellor Sajid Javid at the recent Conservative party conference.

In his statement, Javid promised that the NLW, which is the minimum hourly rate currently payable to workers aged 25 and over, will rise from its current hourly rate of £8.21 to £10.50. This will equate to a 27% increase in the hourly rate of those receiving NLW.

Whilst increases to the NLW are not particularly big news considering they normally happen every year, it was the second part of the Chancellor’s announcement that my client is less likely to have been prepared for. Thousands more younger workers will be entitled to receive the higher rate; it will apply to all those aged 21 and over. Again this will be phased in, with a drop from 25 to 23 in 2021 and a further drop to 21 from 2024.

From my client’s perspective, the good news is that they will have a significant amount of time to prepare for this change in minimum wage law and ensure provisions are in place to ensure staff continue to be paid the correct rate.

Another positive is that the removal of the separate 21-24 year old age band may make the system easier for my client to understand. After all, recent statistics released by the TUC suggest employers struggle to comply with the minimum wage rights of those aged 25 and under. Therefore, this should reduce the likelihood of pay discrepancies from occurring as all staff aged 21 and over will be entitled to receive the same minimum rate.

However, the fact is that my client will still face the prospect of paying staff more money, which is likely to have an impact their budget and operational costs. If my client is concerned about the prospect of paying higher salaries, they may consider offsetting this cost by reducing outgoings in other areas which could include the size of the workforce, the location of the work or other supplier costs, for example.

In addition, if my client already pays staff above the hourly NLW as part of a competitive employee benefits package then they may need to increase this accordingly in order to retain their competitiveness.

HR Expert – Ethical Veganism

My client has heard that it is now unlawful to discriminate against ethical vegans at work. What sort of things do they need to consider?

Whilst there has been no ultimate decision yet, the preliminary hearing in the case of Casamitjana v League Against Cruel Sports has ruled that ethical veganism qualifies as a philosophical belief under the Equality Act 2010, with the tribunal judge insisting that it was “important” and “worthy” of respect in a democratic society.

As this is only an employment tribunal decision, this does not necessarily protect all ethical vegans from discrimination. Although any future tribunal is likely to refer to this ruling in similar cases, they are under no obligation to agree that ethical veganism qualifies as a philosophical belief. Having said this, given the risk involved your client would do well to re-think how they treat ethical vegans within their organisation.

As a first step, it is important to understand the distinction between veganism and ethical veganism as this protection will not apply to everyone. In the case of Mr. Casamitjana, ethical veganism was described as a belief that ‘animals should not be exploited for any purpose’. As ethical veganism extends beyond simply eating a plant-based diet anyone looking to receive this protection will need to demonstrate their commitment to this belief.

Once they have a clear understanding of ethical veganism your client would do well to review their existing business practices to avoid creating a hostile or unwelcoming environment for ethical vegans. Whilst my client may consider introducing a specific policy on ethical veganism, any existing anti-discrimination policy should be sufficient enough.

Having said this, the added publicity around ethical veganism may encourage other employees to behave in a way that creates an uncomfortable environment for ethical vegans at work. Whilst individuals may attempt to pass off discriminatory remarks as ‘workplace banter’, your client should be quick to intervene and take appropriate disciplinary action where necessary.

If catering is provided at work then my client should review the options available to ensure these remain appropriate. The same approach should also be taken when arranging Christmas parties and other work-related social events to ensure that ethical vegans’ dietary requirements are considered.

Certain uniform requirements may also create an unwelcome working environment for ethical vegans, especially if there is a need to wear clothes derived from animal products such as leather shoes. Therefore, my client should consider where adjustments can be made to avoid any unnecessary contact with animal products and avoid claims of discrimination.

In summary, whilst this tribunal decision does not expressly provide all ethical vegans with protection from discrimination at work, it does offer food for thought as far as my client is concerned and should encourage them to adapt any existing practices from a best practice perspective.

HR Expert – New National Minimum Wage Rates

My client is aware that new national minimum wage rates will be introduced in April and want to know what they need to do from an HR perspective to prepare for this?

As announced prior to the New Year, the current national minimum wage (NMW) rates will be increased in April 2020 in what is being described as the ‘biggest ever cash boost’ for UK workers. In fact, estimates suggest these increases will result in a pay rise for almost 3 million UK workers and that a full-time employee could benefit from an increase of up to £930 a year.

These changes mean that those aged 25 and over, and therefore eligible for the National Living Wage (NLW), will be entitled to receive £8.72 per hour, up from £8.21 an hour previously. At the same time, the minimum wage rates for workers aged between 21-24 will increase from £7.70 to £8.20 an hour; the rate for 18-20 year olds will increase from £6.15 to £6.45 an hour and those over compulsory school age, but not yet 18 will get an hourly increase from £4.35 to £4.55. The apprentice rate for those under 19 years of age, or 19 and over but in the first year of their apprenticeship will also increase from £3.90 to £4.15 an hour.

In the lead up to April, my client should work with their payroll department to ensure the new hourly rates are reflected in staff salaries, starting from the relevant pay reference period. It is important that my client gets this right, as unintentional errors could result in claims for unlawful deduction of wages. Therefore, as NMW rates have clearly defined age boundaries it is imperative that my client double checks information on employees’ date of birth ahead of time to ensure this is correct.

For clarity, my client should notify the staff of the pay rise ahead of time with written confirmation. This transparency is likely to be well received and could help build positive employee relations. It also offers an opportunity to explain that any overtime worked during a pay reference period prior to the introduction of the new rates, that is payable after these have been introduced, will still be paid at the previous rate.

Additionally, if my client already chooses to pay staff over NMW as part of a competitive benefits package they may consider increasing salaries further, in line with these changes, to ensure they are able to retain a competitive advantage over minimum wage employers when it comes to recruitment and retention efforts.

Whilst there may be several months until these new rates are introduced, your client should avoid leaving preparations until the last minute. With employees becoming increasingly aware of their rights, especially when it comes to paying, any failure to implement these new rates on time is sure to be noticed and could be particularly costly for my client’s reputation.

HR Expert: Keeping in contact on Maternity Leave

Q- My client runs a small business and has an employee that is about to go off for a year on maternity leave and want to know if they are allowed to contact the employee during her leave. Are there any rules on this? 

A- Business owners can often feel uneasy at the prospect of communicating with staff during a period of leave, however, my client should understand that keeping in contact with an employee on maternity leave is perfectly acceptable and widely encouraged.

Read More

HR Expert: Wrongly Classed as Self-Employed

Q- My client has heard several stories in the news about ‘workers’ being owed compensation after being wrongly classed as ‘self-employed’. How can they be sure they have got the employment status of their own staff correct? 

A- Understanding employment status can be tricky at times, particularly for those who work in the gig economy. In light of recent cases, my client is advised to review their business practices to ensure they are acting in accordance with the law.

To determine the employment status of their staff myclient will need to carry out the appropriate employment status test. This will confirm which of the three employment categories individuals fall into employee, worker or self-employed. These categories determine what employment rights individuals are entitled to, such as annual leave and statutory sick pay. Read More

HR EXPERT: Emplpoyee Refrencing

Does my client have to provide a reference for a former employee?

There can often be some misunderstanding amongst employers regarding their duty to provide references for former staff. However, there is no legal obligation for my client to comply with a reference request, unless they operate in a regulated industry or if this is expressly stated as a contractual provision.

Having said this, it is relatively unusual for an organisation to refuse requests to provide a reference and doing so to punish an employee for involvement in harassment claims, or whistleblowing, will be unlawful. If my client is going to withhold a reference, it is important to make sure this approach is applied universally, as any inconsistency in giving references is likely to increase the chances of former employees feeling that they have been discriminated against.

On the other hand, if my client does agree to provide a reference then they have a duty of care to ensure the information given is accurate and fair. After all, there is a risk that your client could face claims of defamation, or malicious falsehood, for providing unfavourable statements that are untrue, especially if these cause individuals to miss out on a job.

As a result, it will be wise for my client to stick to providing basic references that confirm details such as the individual’s position and their length of employment. Whilst they can always add more information regarding the individual’s performance if they wish, they must ensure that this remains a true representation of their time with the business.

With this in mind, it is worth noting that the government have confirmed plans to consult on making it mandatory for employers to provide simple references for staff. Although there is no indication that this is close to becoming a legal requirement, this proposal is designed to prevent situations where employers are able to silence victims of workplace harassment with the threat of withholding a reference.

As such, it may be wise for my client to get ahead of the curve and implement their own approach to providing simple employee references, making sure to outline this in a relevant workplace policy.

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