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Monday 25th May 2020

How to calculate furlough pay as coronavirus forces UK workers to take leave - Martin Lewis explains zero hour contracts

Money expert Martin Lewis has advice for zero hour contract workers

Finance expert Martin Lewis has called on bosses to pay zero hour contract workers affected by the coronavirus pandemic at least 80 percent of their wages through the Employee Furlough Scheme.

Addressing concerns from zero hour contract workers in a video on Twitter, the MoneySavingExpert.com guru tried to clarify the very complicated financial circumstances surrounding the form of employment.

Earlier this week, during an appearance on This Morning, Martin explained that 'furlough' is "if you can't work, you have a job but your job is on hold". He also said your "company can say we'll put you on furlough and the state will pay 80 percent of your salary up to a maximum of £2,500".

But how does that work out for zero hour contract workers?

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How zero hour contract workers' salaries will be calculated

In his Twitter video, Martin explained how zero hour contract workers' salaries will be calculated considering they often can work variable hours.

He said: "I know the situation has been quite confused here. There is a fairly straightforward route but it will involve your employer so let me take you through it.

The hope is that most employers will pay 100% of the salary.

"If you are on a zero hour contract and you are on PAYE with your employer, then in most cases you are eligible for the Employee Furlough Scheme – the Coronavirus Job Retention Scheme, technically."

Martin continued: "That's where the state will give your employer 80 percent of your salary a month up to £2,500 if you are unable to work. Obviously if you are able to work, if you are a key worker such as a supermarket worker, then you can keep working.

Martin has also been giving out advice on This Morning (Credit: ITV)

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"But if you can't work if you're self isolating, then your employer can put you on Furlough.

"The hope is that most employers will pay 100 percent of the salary. But they don't have to, they only have to pay 80 percent. That is what I suspect most zero hour workers will get.

"So the big question is: what is my salary when I have variable income?"

What is your salary when you have variable income?

Martin explained: "It is either what you earned in February or an average over 12 months previous if that was an anomalously low month.

"If you haven't been at that employer for 12 months, it can be the average over six months. As long as you've been there - whichever is higher. They can put you on Furlough to do that."

What are the challenges?

Martin explained many employers feel they don't know if they are allowed to include their zero hour contract workers.

He pondered: "The problem here is persuading employers who don't think they can do it. A real brain change needs to happen. But what has happened is the government has seeded the employers to be the conduit to support workers.

"Instead of erring on the side of not doing it, err on the side of supporting your workers.

"Employers please see your duty to put someone on Furlough. Even if you have let someone go then please reinstate them and put them on Furlough."

For more information on all matters relating to employment, jobs and coronavirus, please consult the gov.uk website.

You can also find out more about the Employee Furlough Scheme here.

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