The guidance on furlough has been updated as of 17th April 2020 and now states that when calculating 80% of their employees’ wages, employers should not include “non-monetary benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay.”
The entirety of the grant received by the employer to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.
If the employee is in receipt of salary sacrifice benefits, these benefits should be in addition to the wages provided under the terms of furlough.
What this means for payroll
Under our standard salary sacrifice agreements, there are 3 options for employers;
The employee is in receipt of 80% furlough pay with no additional payment from the employer.
For KiddiVouchers the employer can override the voucher order value to £0 as there is no salary available to sacrifice.
For schemes where the ‘benefit’ has already been received, such as Workplace Bikes, the term of the salary sacrifice is extended to allow for the period of furlough.
- The employee is in receipt of 80% furlough pay topped up to 100% by the employer. The top-up can be sacrificed. Any childcare voucher order can be overridden as necessary and the term of other salary sacrifice agreements can be extended if the top-up is insufficient to cover the usual sacrifice.
- The employee is in receipt of 80% furlough pay, the employer can choose to fund the benefit without an equivalent sacrifice but, under our standard agreements, is not obliged to do so.
When considering your options, it is important to note that employee benefits are a great way of keeping furloughed employees engaged and ready to rejoin the workforce when life returns to normality.
Keep up to date here and on GOV.UK.