Government’s guidance for employers on the Job Retention Scheme was updated on 14 May 2020 to state;
“when variable payments are specified in a contract and those payments are always made, they may become non-discretionary. If that is the case, they should be included when calculating 80% of employees' wages."
This is a particularly important update for the temporary labour industry and contracting intermediaries who typically engage “umbrella employees” on the basis that they will be paid the National Living/Minimum Wage and a discretionary “profit related pay” or bonus element.
The Direction is clear that discretionary payments do not form part of regular salary or wages however, the updated guidance now states that if a payment is always made, it may become non-discretionary.
Employers need to consider whether contractual documentation refers to a discretionary element of pay, as well as whether an employee is “always” paid a sum greater than the contractual NMW/NMW.
See the updated guidance here.
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