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CJRS v2 - "flexibly furloughed" - how stupid am I?

Flexibly furloughed covers those whose furlough came to an end part way through July

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I'm way behind the times, but I assumed that if someone came back full-time part way through July, the grant would be worked out in the same way as under CJRS v1. However, it looks like it's calculated in the same way as someone who was furloughed for the whole of July, coming back part-time part way through July. So if someone who'd been furloughed since say 1 April came back to work full-time on 2 July, you still need to calculate the usual hours and  the hours worked for July.

That's what HMRC's calculator suggests. It's also backed up by  the definition of "Flexibly-furloughed employees" in the Treasury Direction of 25 June  (particularly 10.2(c)(ii).

What a pain! Am I missing something (other than a fully-functioning brain)?

Replies (15)

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By PandoraSleeps
14th Aug 2020 13:07

If an employee is not flexibly furloughed during a claim period, there is no need to calculate usual hours (see HMRC guidance).

You would just work out furlough pay for 1 July and then pay them as normal for the remainder of the month.

This is because there is only 1 furlough day in July.

The situation is different for employees going from full to flexible furlough within one claim period. They are furloughed for the whole period. In that case, you do use usual hours for the whole claim period. The alternative is to do 2 claim periods.

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Replying to PandoraSleeps:
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By SarkaT
14th Aug 2020 13:36

I disagree with you Pandora and agree with MJShone on the principle. Once furlough has extended into July, ended, and work resumed, the worker is considered to be flexibly furloughed for claim purposes, and you will need to calculate usual hours.

The claim procedure only allows two options: 1/ fully furloughed for the whole claim period, 2/ fleixibly furloughed.

And to make this even more fun, claims have to be limited to calendar months. If your pay period extends to another month, you will have to do split calculations.

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By PandoraSleeps
14th Aug 2020 14:11

Take a look at HMRC's example 3.3 here: https://www.gov.uk/government/publications/find-examples-to-help-you-wor...

This is clear that if an employee returns to working their normal hours during the claim period, you only work out their furlough pay based on the number of days they were furloughed out of the claim period (flexibly or otherwise).

Having worked out furlough pay (in HMRC's example) for 12 days in July, it is clear (to me!) that you would work out usual hours based on 40 * 12/7,not 40 * 31/7.

There is no need to count hours while not furloughed at all. Hours worked while unfurloughed are an irrelevance to the scheme.

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By MJShone
14th Aug 2020 14:38

Thanks Pandora . That example helps, though it doesn't go on to say whether the grant the employer claims (and what the employee should be paid) is some fraction of £619.35.

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Replying to MJShone:
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By PandoraSleeps
14th Aug 2020 14:58

In HMRC's example it would be a proportion, because the employee was flexibly furloughed for those 12 days. In your example, it would not be a proportion.

I wonder if there is some confusion between claim period and pay period. For your employee, the claim period is just one day, 1 July. It falls into the pay period 1-31 July. I presume that when thinking about the cap to apply to their furlough pay, you would be thinking in terms of one day's worth of the £2,500, and not allowing the full £2,500?

Obviously I appreciate that you would probably include this employee in one claim covering the whole of July, if you have other employees who are furloughed for the whole month.

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By MJShone
14th Aug 2020 17:21

I think the claim period has to be different for different employees. So the employer might make a claim for the whole of the month of July. However, within that, the claim period for an employee could be anything from 1 to 31 days. It has to be 1/31st of £2,500 for the example in my original post. (Assume the cap bites, for simplicity.) If, on that one day, the employee was flexi-furloughed that 1/31st of £2,500 has to be further reduced. Normal working pattern is say a 35 hour week. That's 5 hours a day. Say the employee worked 3.5 hours on 1 July. Usual hours 5, less hours worked 3.5 gives furloughed hours of 1.5. (In spite of the fact that in real life it's 3.5!) So grant is:

£2,500 x 1/31 x 1.5/5.

And the same proportion ie 1/31 x 1.5/5 has to be applied to the NI and pensions threshholds! (At least that's only for July.)

Must have another go at HMRC's calculator to see if I can make it work.

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Replying to MJShone:
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By SarkaT
17th Aug 2020 15:33

Hi, I am still trying to see how Pandora's method would work, and see you added a calculation.

I would not calculate the hours worked the same way as you do. HMRC allows for hugely irregular working patterns, and I do not see the need to split 35h pw equally over 7 days (assuming a regular Mon-Fri pattern). My understanding here is that you would look at your period of furlough - here just one day, and see what is the usual working pattern on that day. It is 7h in your case. Of these, the worker worked 3.5, and so if furloughed for 3.5.

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Replying to PandoraSleeps:
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By SarkaT
14th Aug 2020 14:50

Pandora, the example you gave includes calculating usual hours. The amount paid may be determined simply by the days, but when you go to make the claim, you will be asked:
1. Furloughed for the whole period or flexible?
Answer here is flexible.
2. How many usual hours does the person work, and how many they have worked this period?

So in terms of calculating payroll, you may be able to just do a simple calculation on the basis of days, but for claim purposes, you will have to declare usual hours and hours worked for each employee you claim for (and keep timesheets for 6 years to back it up).

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Replying to SarkaT:
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By SarkaT
14th Aug 2020 14:55

Sorry, one more note. Claims from July have to be made per calendar month. The cample Pandora refers to shows how to calculate claims where contracted hours have to be split between two claim periods (my thoughts are with you who have to do that).

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Replying to SarkaT:
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By PandoraSleeps
14th Aug 2020 15:02

Are you looking at the same example as me?! 3.3 does not calculate usual hours. And it is talking about a one month pay period, July.

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Replying to PandoraSleeps:
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By SarkaT
14th Aug 2020 16:58

Apologies, I was not looking at 3.3. I see now what you meant. But then I do not understand how you make the claim. If you say they were fully furloughed throughout July, when they came back half way through, this will not be in line with payroll RTI, and you will underclaim NIC and pension. How do you get around that?

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By PandoraSleeps
14th Aug 2020 15:00

Perhaps we should also have reference to HMRC's guidance here:
https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-...

This actually follows on from the bit that the OP quoted above and says

"You can calculate the usual hours for the entire claim period or for each pay period, or part of a pay period, that falls within that claim period. This guidance assumes that you will calculate on a pay period basis but either method is acceptable."

Sounds like either method is acceptable. Which it should be really, given both are perfectly logical and I doubt the results would be much different. It's just mine is simpler.

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Replying to SarkaT:
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By PandoraSleeps
14th Aug 2020 15:55

The answer to 1 would be fully furloughed not flexible. Then no need to give hours.

It is a bit confusing because I agree with you that the Treasury Direction calls all employees "flexibly furloughed" after 1 July, whether they are working some hours or no hours. However, HMRC in their guidance and their claim process do still distinguish between the two "types" of furlough.

Otherwise by that logic I presume you would be answering "flexible" to question 1 even if the employee did not work at all in the month.

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Replying to PandoraSleeps:
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By Paul Crowley
14th Aug 2020 15:44

Agree both your posts

Edit
All your posts

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By MJShone
14th Aug 2020 13:59

The HMRC calculator asks:
On 31 July, is this employee still fully furloughed? The only options are: "Yes", "No, they worked during the claim period (flexibly furloughed)" and "No, they are no longer an employee". There's no "No, their period of furlough has come to an end".
HMRC Guidance says: "If your employee is fully furloughed, you do not need to work out their usual and furloughed hours..." That's different from saying "If an employee is not flexibly furloughed during a claim period, there is no need to calculate usual hours"

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