Guidance

Examples to help you work out the reference salary

Published 30 October 2020

This guidance was withdrawn on

The Job Support Scheme, which was due to start on 1 November 2020, has been withdrawn.

© Crown copyright 2020

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This publication is available at https://www.gov.uk/government/publications/find-examples-to-help-you-calculate-your-employees-wages-for-the-job-support-scheme/examples-to-help-you-work-out-the-reference-salary

Example of working out the reference salary for an employee with fixed pay

Nicola started working for N Ltd before February 2020. She is paid a fixed salary and her pay period is weekly, ending on a Friday.

Her JSS temporary working agreement started 1 November 2020. N Ltd is calculating the amount of Job Support Scheme grant they can claim for the pay period 7 November 2020 to 13 November 2020.

  1. N Ltd identifies the pay in each of the last pay periods ending on or before 19 March 2020 - £430 for the week to 13 March 2020 and 23 September 2020 - £460 for the week to 18 September 2020.

  2. N Ltd uses the higher amount of pay: £460. This is less than the maximum reference salary value for a week (£721.15), so N Ltd uses £460.

Example of working out the reference salary for an employee with fixed pay where the pay frequency has changed since March

Oliver started working for O Ltd before February 2020. Oliver is paid a fixed salary. In April 2020 his pay frequency changed from weekly to monthly.

His JSS temporary working agreement started 1 November 2020. O Ltd is calculating the amount of Job Support Scheme grant they can claim for the pay period 1 November 2020 to 30 November 2020.

  1. O Ltd identifies the pay and length of each of the last pay periods ending on or before:19 March 2020 - £470 for the week to 13 March 2020 and 23 September 2020 - £2,100 for the calendar month to 31 August 2020

  2. O Ltd divides the amount of pay in each identified pay period by the number of calendar days in that period:£470 ÷ 7 = £67.14 and £2,100 ÷ 31 = £67.74

  3. O Ltd multiplies the higher result, £67.74, by 30 (the number of calendar days in the pay period they are calculating for): £67.74 x 30 = £2,032.20.

  4. The result is less than the maximum reference salary value for a month (£3125), so O Ltd uses £2,032.20.

Example of working out the reference salary for an employee with fixed pay where the pay frequency has changed since September

Priya started working for P Ltd before February 2020. On 1 October 2020 her pay frequency changed from four-weekly to weekly. She is paid a fixed salary.

Her JSS temporary working agreement started 16 November 2020. P Ltd is calculating the amount of Job Support Scheme grant they can claim for the pay period 16 November 2020 to 22 November 2020.

  1. P Ltd identifies the pay and duration of each of the last pay periods ending on or before 19 March 2020 - £1,700 for the four weeks to 15 March 2020, 28 days and 23 September 2020 - £1,720 for the four weeks to 20 September 2020, 28 days

  2. P Ltd divides the amount of pay in each identified pay period by the number of calendar days in that period:£1,700 ÷ 28 = £60.71 and £1,720 ÷ 28 = £61.43.

  3. P Ltd multiplies the higher result, £61.43, by 7 (the number of calendar days in the pay period they are calculating for): £61.43 × 7 = £430.01

  4. The result is less than the maximum reference salary value for a week (£721.15) so P Ltd uses £430.01.

Example of working out the reference salary for an employee who has not been paid for a full pay period on or before 23 September (and the maximum reference salary applies)

Q Ltd pays its employees weekly on a Monday. All of the employees are on a fixed salary.

Q Ltd entered into a JSS temporary working agreement on 12 November 2020 with one group of employees, and is calculating the amount of government grant they can claim for the pay period 17 November 2020 to 23 November 2020.

Qasim started employment with Q Ltd on 17 September 2020. His last pay period on or before 23 September 2020 was for the period 17 September 2020 to 21 September 2020, which was not a full pay period. His gross pay in this period was £600.

  1. Q Ltd identifies the wages payable to Qasim in his last pay period ending on or before 23 September: £600.00

  2. Q Ltd divides by 5 (the number of calendar days in that short pay period (including non-working days): £600 ÷ 5 = £120.00

  3. Q Ltd multiplies by 7 (the number of calendar days that would have been in a full pay period): £120 x 7 = £840.00

  4. The result is more than the maximum reference salary value for a week (£721.15), so Q Ltd uses the maximum reference salary value of £721.15 instead.

Example of working out the reference salary if an employee with fixed pay and fixed hours has permanently reduced their working hours

Rose works for R Ltd. She was previously contracted for 40 hours a week but is now contracted for 20 hours per week after taking partial retirement on 1 May 2020. This is a permanent contractual variation. She was previously paid £5,000 per month and is now paid £2,500 per month.

She is paid monthly on the last day of each month and R Ltd is preparing to claim for November.

To calculate the reference salary for the pay period 1 November 2020 to 30 November 2020:

  1. As Rose does not work variable hours and has a permanent, written contractual reduction in her working hours between 19 March and 23 September 2020 R Ltd only considers her pay in the last pay period ending on or before 23 September 2020. Rose’s wages payable in her last pay period ending on or before 23 September 2020 were £2,500 for the month to 31 August 2020.

  2. The result is less than the maximum reference salary value for a month (£3125), so R Ltd uses £2,500.

Example of working out the reference salary based on the same calendar period in the tax year 2019 to 2020

S Ltd entered into a JSS temporary working agreement with Steve a variable paid employee on 12 November 2020, and is calculating the amount of government grant they can claim for the pay period 1 November 2020 to 30 November 2020.

Steve earned £1,465 in the pay period 1 November 2019 to 30 November 2019. Steve was employed continuously by S Ltd for the entire pay period.

  1. S Ltd identifies the pay periods in the 2019 to 2020 tax year that correspond to at least one calendar day in the pay period they are calculating for the only corresponding pay period is 1 November 2019 to 30 November 2019.

  2. If there is only one pay period identified, and if all its days correspond to calendar days in the pay period you are calculating for – use the amount the employee earned in the identified pay period: Steve earned £1,465 in the pay period 1 November 2019 to 30 November 2019.

  3. There is only one corresponding pay period, so S Ltd can skip this step.

  4. If the result is more than the maximum reference salary for the same pay period length (annual, monthly, weekly etc), use the maximum reference salary value instead.

The maximum reference salary value for a full month is £3,125. £1,465 is less than this, so S Ltd uses £1,465.00.

Example of working out the reference salary based on more than one pay period in the tax year 2019 to 2020

Tracey is a variable paid employee who entered into a JSS temporary working agreement on 13 November 2020.

T Ltd is calculating the amount of government grant they can claim for the pay period 16 November 2020 to 29 November 2020 (2 weeks, 14 days).

Tracey earned £800 in the pay period 4 November 2019 to 17 November 2019 and £850 in the pay period 18 November 2019 to 1 December 2019.

  1. T Ltd identifies the amount Tracey earned in the first pay period identified in the tax year 2019 to 2020 (4 November 2019 to 17 November 2019): £800.

  2. T Ltd divides by the number of calendar days in that pay period: £800 ÷ 14 = £57.14.

  3. T Ltd multiplies by 2 (the number of calendar days in that pay period which correspond to a calendar day in the pay period they are calculating for): £57.14 x 2 = £114.28. Repeat steps 1, 2 and 3 for each subsequent identified pay period in the tax year 2019 to 2020.

  4. T Ltd identifies the amount the Tracey earned in the subsequent pay period identified in the tax year 2019 to 2020 pay period 18 November 2019 to 1 December 2019: £850.

  5. T Ltd divides by the number of calendar days in that pay period: £850 ÷ 14 = £60.71.

  6. T Ltd multiplies by 12 (the number of calendar days in that pay period which correspond to a calendar day in the pay period they are calculating for): £60.71 x 12 = £728.52.

  7. T Ltd adds these all together: £114.28 + £728.52 = £842.80.

  8. T Ltd compares the result to the maximum reference salary. The maximum reference salary value for two weeks is £721.15 x 2 = £1,442.30. The result of step 7 is less than this, so T Ltd uses the result of step 7 which is £842.80.

Example of working out the reference salary based on the average wages payable in the tax year 2019 to 2020

Umair is paid a variable amount and entered into a JSS temporary working agreement on 14 November 2020. U Ltd is calculating the amount of government grant they can claim for the pay period 1 November 2020 to 30 November 2020.

Umair was paid £14,170 in the tax year 2019 to 2020.

Umair was on paternity leave for two weeks (14 days) in the tax year 2019 to 2020. He was paid £500 for the period of paternity leave.

  1. U Ltd identifies Umair’s wages in the tax year 2019 to 2020 (disregarding the period of family related statutory leave): £14,170 - £500 = £13,670.

  2. U Ltd divides by the number of days in the tax year (disregarding the period of family related statutory leave, 366 – 14 = 352 days): £13,670 ÷ 352 = £38.84.

  3. U Ltd multiplies by the number of calendar days in the pay period they are calculating for: £38.84 x 30 = £1,165.20.

  4. U Ltd compares the result to the maximum reference salary. The maximum reference salary value for a full month is £3,125. The result of step 3 is less than this, so U Ltd uses the result of step 3 which is £1,165.20.

Example of working out the reference salary based on the average wages payable from 1 February 2020 to 23 September 2020

Violet is paid a variable amount, and entered into a temporary working agreement on 15 November 2020. V Ltd is calculating the amount of government grant they can claim for the pay period 1 November 2020 to 30 November 2020.

Violet was employed by V Ltd on 1 May 2020. She was paid £7,140 between 1 May 2020 and 23 September 2020.

  1. V Ltd identifies the wages paid to Violet from 1 February 2020 to 23 September 2020 (disregarding the period before the employment began): £7,140.

  2. V Ltd divides this amount by the number of days between 1 February 2020 and 23 September 2020 (disregarding the period before the employment began 1 May 2020 to 23 September 2020 = 146 days): £7,140 ÷ 146 = £48.90.

  3. V Ltd multiplies by the number of calendar days in the pay period: £48.90 x 30 = £1,467.00.

  4. V Ltd compares the result to the maximum reference salary. The maximum reference salary value for a full month is £3,125. The result of step 3 is lower, so V Ltd uses the result of step 3 which is £1,467.00.

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