The furlough scheme (or Coronavirus Job Retension Scheme: CJRS) to give it its official title) was introduced in March 2020 to protect workers who would otherwise be laid off, or made redundant.
The original scheme was for the period 20 March to 31 May 2020, then extended to 30 June 2020.
The Chancellor announced on 29 May 2020 that the furlough scheme would be extended to 31 October 2020, with flexible furlough being introduced. See our blog: 29 May 2020: Updates to Furlough and Self-Employed Grants for more info.
This will help you to start bringing back your furloughed workers on a part-time basis, as you ramp your business back up.
on 12 June we were provided with more info to help employers to plan for flexible furlough:
- The first time you can claim for July furloughed days is 1 July, you can’t claim for periods in July before this date
- Bring furloughed employees back to work for any amount of time and any shift pattern.
- Claim CJRS grant for the hours not worked.
- You can continue to choose to top up your employee wages above the 80% total and £2,500 cap for the hours not worked, at your own expense.
- You can still keep employees on full furlough if you need to.
- For payroll periods on or after 1 July, the maximum employees you can claim for can’t be more than the maximum you’ve previously claimed for.
- For example, if you have 5 employees, but you’ve only had 3 employees furloughed at any one time, then the maximum number you can furlough is 3.
- For example, if you have 5 employees, but you’ve only had 3 employees furloughed at any one time, then the maximum number you can furlough is 3.
Summary of changes to furlough grants:
The table below shows the Government contribution, and the amount the employee will receive if they’re fully furloughed.
How to calculate Flexible Furlough
If your employee is flexibly furloughed, you’ll need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period.
There are two different calculations you can use to work out your employee’s usual hours, depending on whether they work fixed or variable hours.
1. Fixed Hours
If your employee is contracted to work a fixed number of hours, you should work out their usual hours based on this.
The employee’s working pattern does not have to match their pay period (for example, an employee could be contracted to 40 hours a week, but be paid monthly).
You need to calculate the usual hours for each pay period, or part of a pay period, that falls within the claim period.
To calculate the number of usual hours for each pay period (or partial pay period):
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- Start with the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.
eg 40 hours per week - Divide by the number of calendar days in the repeating working pattern, including non-working days.
eg 7 days per week (including the weekend) - Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
eg for July – 31 days - Round up to the next whole number if the outcome isn’t a whole number.
- Start with the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.
Examples of how to calculate your employees wages:
2. Variable Hours
Variable hours are a little more complicated, so do ask us for help if you’re stuck!
You should work out usual hours for employees who work variable hours, if either:
- your employee is not contracted to a fixed number of hours
- your employee’s pay depends on the number of hours they work
The ‘usual hours’ in this case will be calculated based on the higher of either:
- the average number of hours worked in the 2019/2020 tax year
- the corresponding calendar month in the 2019/2020 tax year
You need to calculate the usual hours for each pay period, or part of a pay period, that falls within the claim period.
To work out the usual hours for each pay period (or partial pay period) based on the average number of hours worked in the tax year 2019 to 2020:
- Start with the number of hours worked (including paid leave) in the tax year 2019 to 2020 before the employee was furloughed, or the end of the tax year if earlier.
- Divide by the number of calendar days the employee was employed by you in the tax year 2019 to 2020. Up until the day before they were furloughed, or the end of the tax year if earlier.
- Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
- Round up to the next whole number if the outcome isn’t a whole number.
To work out the usual hours for a pay period or partial pay period based on the corresponding calendar period in the tax year 2019 to 2020:
- Identify the pay periods in the 2019 to 2020 tax year that correspond to at least one calendar day in the pay period (or partial pay period) you are claiming for.
- If the pay period (or partial pay period) you are claiming for starts and ends on the same calendar days as the identified pay period in the tax year 2019 to 2020 – use the number of hours they worked in that pay period.
- If the pay period (or partial pay period) you are claiming for does not start and end on the same calendar days as the identified pay periods in the tax year 2019 to 2020 – you’ll need to add together a proportion of the hours worked in each of the pay periods you’ve identified.
Monthly payrolls will be ok as the pay period will be the same.
But for weekly payrolls, the pay periods will be different, as the furloughed week this year will overlap with 2 different pay periods from last year, so we need to pro-rata the hours from the two weeks to work out the hours from the corresponding pay period.
More examples from HMRC here.
Phew! Hopefully you’ve got your head round that, but we’re here to help, so do ask for support.
We’re here for you
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Stay safe. Stay strong.
Sharon x
