Save content
Have you found this content useful? Use the button above to save it to your profile.
Laptop and phone being simultaneously used.
istock_cecilie_arcurs_aw

CJRS: What are usual hours for flexi-furlough purposes?

by

Coronavirus Job retention Scheme (CJRS) 2.0 came into effect on 1 July, but HMRC has updated the guidance again on 11 September. Kate Upcraft unpicks the calculation of an employee’s “usual hours”.

14th Sep 2020
Save content
Have you found this content useful? Use the button above to save it to your profile.

It is vital that employers and payroll agents record which iteration of the HMRC guidance they relied upon when making each CJRS claim, in order to defend any assertion from HMRC that the claim is incorrect and needs to be repaid. Given that records need to be kept for six years, and no one will remember why certain decisions were made, the financial and reputational risk could hangover employers for up to a decade.

Usual hours – when do you need them?

The determination of usual hours is the starting point for any flexi-furlough claim, so it is vital that this is calculated correctly. The furlough hours must be calculated as:

Furlough hours = Usual hours – worked hours

If an employee is on full furlough for the whole of the claim period, in theory there is no need to calculate, or report, usual hours. However, the templates to use for 100 or more furloughed employees include columns for usual, actual and furloughed hours. HMRC is telling employers that these fields do need to be completed in all cases, even for individuals who are fully furloughed, or the spreadsheet submitted may be rejected. This applies even if the overall claim period starts before their individual furlough start date and, or ends after their individual furlough end date.

For CJRS2 claims for fewer than 100 employees you are asked at the outset whether it’s a flexi-furlough claim or not. If you answer ‘yes’ to the flexi-furlough question then you will be asked for usual and actual hours, the system will then calculate the furloughed hours.

From 14 September 2020 new guidance applies for employees who come off furlough part way through a claim period. For such employees you should calculate the employee’s usual hours up to the last day of furlough, instead of to the end of the claim period. Do not include any working hours after the last day of furlough. This applies even if your claim period includes days after the employee’s last day of furlough. Claims made before 14 September do not have to be amended for this new guidance.

Two methods, several steps

Calculating the employee’s usual hours is not logical or familiar, so don’t make assumptions

Register for free to continue reading

It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:


Content lock down, tick icon

View all AccountingWEB content


Content lock down, tick icon

Comment on articles


Content lock down, tick icon

Watch our digital shows and more

Access content now

Already have an account?

Replies (15)

Please login or register to join the discussion.

Routemaster image
By tom123
07th Jul 2020 10:25

Thanks Kate, - I am glad my case matches your case 1...

Thanks (0)
avatar
By pauljohnston
08th Jul 2020 09:51

Wow what a dogs dinner. For those on a fixed monthly salary returning 1 day out of 5 should mean an easy calculation 1/5 Full and 4/5 furloughed. I personally dont see why this is not acceptable to HMRC. The furlough claim for July and August will be higher that that for September using HMRC's calculation and hellishly more complex.

Come on HMRC think also about those as indicated above

Thanks (4)
Replying to pauljohnston:
avatar
By hmlask
08th Jul 2020 10:11

I agree.

Surely if we do the logical calculations, HMRC cannot complain.

Thanks (2)
avatar
By stevedpearce
08th Jul 2020 10:04

Just an extra twist ...in example 2 if furlough had begun in March you exclude the furloughed days to adjust the figure of 366 to work out usual hours......I believe

Thanks (0)
sally26
By Sally26
08th Jul 2020 10:07

Thanks so much Kate for your help and openness. Really pleased to see we are thinking the same sort of way
Sally

Thanks (0)
avatar
By rossetaz
08th Jul 2020 10:08

I agree with Paul, When I read it my heart sank. I really do not have the time to do this calculation for every employee in every employer who I deal with and to whom it applies and even more relevant I can just imagine what is happening with employers who are dealing with their own. This I believe is unnecessarily complicated when the rules have meant that there have been people who have done better than others due to "rules" such as when someone is on varied hours and using the same month last year has worked out quite a lot different than using the average for the year and that was acceptable.

Thanks (1)
avatar
By loraine99
08th Jul 2020 10:11

Great article Kate - thank you.
Is there any guidance yet or do you have any thoughts regarding the part-time furlough for directors. They have never been required to record their working hours and often work variable hours for a fixed fee.

Thanks (3)
avatar
By PandoraSleeps
08th Jul 2020 10:54

I think the HMRC guidance says you apply the cap first, i.e. you work out the reference salary as normal and then limit it to £2,500 (or whatever the appropriate pro rata is when the claim period is not a month) and THEN work out the amount to claim by dividing by usual hours and multiplying by furlough hours.

Thanks (0)
avatar
By Gone Sailing
08th Jul 2020 11:11

Re Example 1:
7.5 x 23 (Mon-Fri in July) = 172.5
HMRC say use 167
Lower denominator, higher claim.

Thanks (0)
avatar
By PaulK937
08th Jul 2020 11:24

Thanks for the article and thanks for doing a weekly example although I am a little confused as to why the second period is not 7 days as the pay period ends on 12 July, ok the furloughing was last on 10 July but surely you have to consider that whole week. The first week is split as it would otherwise straddle the month end and beginning so that is understandable but after that you have to consider full weeks at least that was my reading of the guidance.

Thanks (0)
nsa newquay
By adam kay
08th Jul 2020 14:14

Example 3 is a bit odd. Why is the claim period for the second week only 5 days even though it is a week? It seems odd that it is divided by 7 days in the week and then multiplied by 5 when there are 7 days in the week and earlier in the article it states that it's based on calendar days not days worked. Is this correct?

Thanks (0)
Replying to adam kay:
avatar
By loraine99
09th Jul 2020 11:46

Completely agree! Employees are being seriously short changed on their furlough pay and will not be expecting this anomaly. Why isn't usual hours simply contracted hours? Is it some kind typo?

Thanks (0)
avatar
By Ian McTernan CTA
09th Jul 2020 11:34

Out here in the real world people will use whatever method works out easiest to do, then make a claim. It might not be 100% accurate but will be within a couple pounds of where it should be.

People will rely on software to do the calculations for them in most cases, rather than spend hours trying to work out whether it's 167 or 171 or 12.46546557, or will use simple methods to work it out as best they can.

The above article demonstrates perfectly how stupidly complex people can make things. Example 3 shows exactly where it will go wrong. HMRC's methods will be ignored and claims will be made based on 40 hours as that is the actual amount of hours he is contracted to work for, and he actually worked to 20, so people will claim 20 furloughed- because that is logical.

Can't wait to see how HMRC will sort out this massive mess of their own making.

Thanks (2)
Caroline
By accountantccole
14th Sep 2020 14:34

Good grief - why change it again at this late stage?

Thanks (2)
Replying to accountantccole:
Routemaster image
By tom123
15th Sep 2020 11:45

I agree, especially as there is no 'trigger' for this change. People were expecting it from phase 1 to 2, but not now.

Thanks (0)