CJRS Updated Calculation - July 2020
From 1st July, employers can bring back furloughed workers on a part-time basis, choosing how many hours, and what days they will work.
Under the new rules, employers will be responsible for paying 100% of wages for hours worked, including Employers NIC and employers' minimum pension contributions.
For July, the CJRS will continue to cover 80% of the furloughed hours, up to a pro rata maximum of £2,500 per month along with the associated employer costs (ER NIC and Pensions).
Claiming the CJRS
Under the flexible furlough rules, HMRC have set out various statements that customers should be aware of:
- Employees must have completed the minimum furlough period by 30th June 2020. This means that employees' furlough start dates must be on or before 10th June 2020
- Employees returning from parental leave are the only exception. If their parental leave finishes after 10th June 2020, they can still be placed on furlough, although their employer must have claimed via CJRS previously for other employees
- When claiming for the CJRS grant in July, the number of employees being claimed for must be the same or less than the number of employees in previous claims. For example if a claim was sent for 150 employees in June, then July’s claim must be for 150 employees or less
HMRC Claim Export
Fourth is currently working on a new export that accommodates the new calculations, which will help customers claim flexible furlough payments from HMRC.
When paying employees for flexible furlough it is important that different payment types are used for both the worked and furlough hours, as the export will need to identify the furlough payment.
Hours that are worked should be scheduled through the rota as normal, for both hourly and salary employees. Payments for the furlough proportion of the payment should be paid using a payment type flagged as ‘Furlough’.
Please Note: Fourth is working on ways in which the usual hours and worked hours can be both pre-populated and overridden so that the export can be utilised by as many customers as possible.
Identifying Usual Hours Worked
Usual hours worked per period will be required in order to make a claim under the new flexible furlough claim rules.
For salaried employees, these usual hours should be the contracted hours. When reporting, the hours for the period will be required.
If employees are contracted for 37 hours per week, but are paid monthly, then the usual hours worked for the period need to be worked out as follows:
Weekly Hours ÷ 7 x days in period
37 ÷ 7 x 31 = 163.85 (round to 164)
Variable Hours Employees
For employees who work variable hours and are paid for each hour worked, the usual hours will be:
- The average hours for the whole of the 2019/2020 tax year
- The hours worked on the same days the previous year
Whichever is higher.
Usual hours should include the holiday hours paid to an employee.
Please Note: Fourth is developing a new export that can be run for a date range which will extract the hours (and holiday hours) from the rotas to allow customers to easily identify the usual hours that should be used. The average hours for 2019/2020 will also be available on the Furlough Status export
Employee within a monthly claim period
Employee earns £3,000 per calendar month which is paid on the last working day, and their contracted hours are 40 hours per week.
To work out the monthly usual hours, divide the weekly hours by 7 and multiply the number of days in the pay period.
July contracted hours = 40 ÷ 7 x 31 = 177.14 (round up to 178)
The employee is expected to work 92 hours in the pay period 1st – 31st July and be furloughed for the remaining 8 hours.
The employer can claim 80% of the employee’s usual salary for those furloughed hours.
The employer will be required to pay the employee for the working hours, subject to PAYE and employee NICs. They will also be responsible for the associated employer NICs and pension contributions.
Usual Monthly Salary ÷ usual monthly hours x worked hours
£3,000 ÷ 178 x 92 = £1550.56
The employer can claim a wage grant under CJRS.
Usual Furlough amount ÷ days in pay period x days in claim period ÷ usual contracted hours x furlough hours
£2,400 ÷ 31 x 31 ÷ 178 x 86 = £1159.55
Please note: the cap for the furlough claim will be calculated on a pro-rata basis.
Furlough Cap ÷ days in pay period x days in claim period ÷ usual contracted hours x furlough hours
£2,500 ÷ 31 x 31 ÷ 178 x 86 = £1,207.87
Employer National Insurance
Calculate Furlough Secondary Threshold (ST)
Full ST for period ÷ days in pay period x days in claim period ÷ usual hours x furlough hours
£732 ÷ 31 x 31 ÷ 178 x 86 = £353.66
Calculate furlough NIable Pay
Furlough pay amount – Furlough ST
£1,159,55 - £353.66 = £805.89
Calculate Furlough ER NIC Claim amount
Furlough NIable Pay x 13.8%
£805.89 x 13.8% = £111.21
Total amount of ER NIC to claim = £111.21
Calculate furlough Lower limit qualifying Earnings (LLQE)
LLQE for period ÷ days in pay period x days in claim period ÷ usual hours x furlough hours
£520 ÷ 31 x 31 ÷ 178 x 86 = £251.24
Calculate furlough pensionable pay
Furlough pay amount – Furlough LLQE
£1,159.55 - £251.24 = £908.31
Calculate furlough ER Pension claim amount
Furlough Pensionable Pay x 3%
£908.31 x 3% = £27.25
Total amount of ER Pension to claim = £27.25
Other Pay Frequencies
The calculations for weekly, fortnightly and four-weekly payrolls are the same, except for the amounts used in the NIC and the pension calculations.
Below are the thresholds that should be used for the different pay frequency calculations.
ER National Insurance Secondary Threshold
ER Pension Lower Limit Qualifying Earnings