Variable Pay Employee Vs Fixed Pay Employee – Furlough Scheme Implications Explained

We have recently assisted a well known fashion retailer in successfully defending an unlawful deduction from wages claim in relation to furlough payments received by the employee. This is an important decision, not only for our client, but also other employers who have made use of the Coronavirus Job Retention Scheme ("the Scheme").

Background

The employee's contract of employment stated the employee had a contractual entitlement to a minimum of 20 hours per week. Having had much time off due to sickness during 2019/2020, the employee had only worked a total of 32 hours overtime within the reference period (2019 – 2020 tax year). The employer categorised the employee as a variable paid employee under the Scheme, on the basis that the employee had an entitlement to and had worked overtime during the reference period. The employer adopted the same approach for all employees working in the same role as the employee, on the basis of this entitlement to