WFM UK: Furloughed Employees: Paying Salaried Employees

Overview

There are three recommended options for paying Salaried Furloughed employees:
 

• Use a calculated payment type to calculate 80% of the full salary

or

• Replace Employees' full annual salary with one calculated at 80%

or

• Use a 20% gross deduction

This article will provide guidance on each option.

For other articles relating to the ongoing Covid-19 epidemic, please visit Fourth Products and Covid-19

Use a Calculated Payment Type

Calculated Payment Types within the Payroll module use a formula to calculate the amount of salary to pay each period. For a monthly payroll, the standard formula is:
 

Annual Salary x 1 / 12

As long as the formula uses this format, it can be added to the Payment Type.
 

• To create a new Calculated Payment type, go to Payroll > Administration > Payment types > Add New Calculated Payment Type
• In the Description  field, enter a payment name (this will appear on the payslip). Fourth recommends using ‘Furlough Payment’
• Accounting System Code - this will feed into Nominal Ledgers and Super Journal

• The payment must be subject to Tax, National Insurance and Pension, therefore, ensure the following aspects are ticked:
  • Pensionable
  • Qualifying Earnings for Pensions
  • Tax
  • National Insurance

Fig.1 - Adding a new Calculated Payment Type

The formula for the calculation is set towards the bottom of the page. The example in Fig.2 shows the formula for monthly paid employees.
 

Fig.2 - Calculated Payment Type Formula

• Once the page has been completed, select Save

The formulas for each pay period are as follows:
 

• Monthly – Annual salary x 1 / 15
• Four Weekly / Lunar – Annual Salary x 1 / 16.25
• Fortnightly – Annual Salary x 1 / 32.5
• Weekly – Annual Salary x 1 / 65

The Payment Type can be added to furloughed employees and they will receive 80% of their period salary, without having to amend the annual salary amount in their Employment Details page. 

Removing and Adding Payment Types

Removing Payment Types

Once the Payment Type has been set up, the Standard Salary Payment Type needs to be removed from the employee record, and a new one created.

This can be done using the Batch Payment Type Management option within the Payroll module.
 

• Go to Payroll > Pay Run Admin > Batch Payment Type Management

Fig.3 - Batch Payment Type Management

• Select the Company and Pay Basis
• From the Payment Type Description drop-down, select the Payment Type to be removed
  • To remove the Payment Type from all employee records, select Delete payment type from all employees
• To remove the Payment Type from individual employees, select Search

Fig.4 - Removing a Payment Type

A list of employees with the selected Payment Type assigned will appear.
 

• Change the Units to zero against employees who are to have the Payment Type removed

Fig.5 - Zero Units for required employees
 

• Select Save (this page only)

The list will refresh and the details of the current Payment Types will show on the screen.
 

Fig.6 - Updated Current Units Values

Please note: With the Units set to zero, the Payment Type will still remain in the employees' records. This means the payment will not be paid.


Adding Payment Types
 

• To add the new Payment Type to all employees, again go to Payroll > Pay Run Admin > Batch Payment Type Management and select the required Company and Pay Basis

• From the Payment Type Description drop-down, select the Payment Type to be added

  • To add the Payment Type to all employees, select Add payment type to all employees

• To add the Payment Type to individual employees, select Search

A list of employees will appear.
 

• Tick the box under Included to add the payment to that employee
• Leave the Units fields with a 1 in them

Fig.7 - Ticking 'Included' boxes for required employees

• Select Save (this page only)

Once saved, the screen will refresh to show the units and amounts that are ready to be paid in the next pay run.

Fig.8 - Updated Units and Amount values

Replace Employees' Full Annual Salary

If you would like to amend an employee’s annual salary within their Employment Details page, this can be amended with an effective date of the change.

The Employee Batch update can also be used to amend salaries for multiple employees.

• Choosing a group of employees and the attribute of salary will open the salary field to allow the amendments

• Please ensure an effective date is entered.

The following Community article can be referenced - WFM - Using Employee Batch Update

Please be aware that applying a change to the batch update page will only change those employees on the current page.
 

• Move through the pages applying the same change to include everyone.

Note for Stream (formerly Wagestream) customers - as the Annual Salary field is referenced through the API, we recommend this is the option used for Stream customers. Fourth can facilitate a salary upload if required, please speak to your CSM or CCT contact. 

Use 20% Gross Deduction

A Salary Payment Type will remain in employee records until it is physically removed. The quickest way to reduce this amount by 20% would be to add in a negative Gross Payment type for the 20% amount.

A new Standard Payment Type can be used for this deduction from pay.
 

• To create a new payment type, go to Payroll > Administration > Payment Types > Add New Payment type

• Description – enter a payment name (this will appear on the payslip)

• Payment Code – this is used to batch upload payments

• Accounting System Code – this will feed into Nominal Ledgers and Super Journal

• The payment must be subject to Tax, National Insurance and Pension, therefore, ensure the following aspects are ticked:

  • Pensionable

  • Qualifying Earnings for Pensions

  • Tax

  • National Insurance

• Once the page has been completed, select Save

Fig.9 - Creating a new payment type

The payments can be uploaded into the payroll using the standard payment upload process. See WFM - Uploading Payments.

Note: If using the upload process, remember to ensure the ‘value’ is a negative value so that it reduces the employee’s gross pay

Bureau Customers

Bureau customers should contact their payroll specialist for help managing these changes.