Furlough commission payments and the Coronavirus Job Retention Scheme

Last week The PGA became aware of a significant number of Members, who are employed by a number of employers, who were experiencing difficulties regarding the amount of pay they were being offered under the furlough scheme available under the Coronavirus Job Retentions Scheme (CJRS).

The situation, which is not uncommon to many employed members, was their job was clearly segregated between hours in retail or general club duties and coaching/teaching hours. All of this pay was paid through the payroll but their contracts deemed the coaching element to be a ‘commission’. Therefore, employers were offering furlough pay to be just on the retail hours and not the coaching income as commission was deemed to be outside the scope of furlough pay. In most cases this results in the professional receiving significantly lower pay under the furlough scheme.

The employer stance was understandable due to the contract wording and the furlough definitions but, on review of the contract definitions, we sought advice from both tax and legal advisors and this supported our belief that the pay was not purely a commission payment in the usual way commissions are made but was constructed to ensure the professional was receiving a fair wage  for the work undertaken and thus part of their pay available to furlough.

UPDATE

On 4 April 2020, the Government published further guidance on the CJRS and significantly for members paid commission in the arrangements described above (or any similar arrangements), the guidance contained the following detail:

Past overtime, fees, commission, bonuses and non-cash payments

You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.

So, our interpretation of this, and that the commission payable to members was contracted in a way to enable a fair income payment to be made to members based on their coaching hours, is that the commission of this type falls within the guidance definition above of ‘compulsory commission payments’ as it is contracted and therefore employers should be including these payments within any furlough calculations that are made to PGA Members.

The full wording of the guidance, which contains a number of other useful updates (including that employees can be furloughed, return to work and then be re-furloughed / and while on furlough employees can receive pay for another job) can be found by CLICKING HERE.