WFM UK: Flexible Furlough Scheme: July 2020 Guidance

CJRS Updated Calculation - July 2020

From 1^st 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 30^th June 2020. This means that employees' furlough start dates must be on or before 10^th June 2020
• Employees returning from parental leave are the only exception. If their parental leave finishes after 10^th 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:To override usual and actual hours worked please see WFM Release Note - Upload Usual and Actual Hours for Flexible Furlough Claims

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.

Salaried Employees 

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

Or

• 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: The Employee Hours Worked export 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. Please see WFM Release Note - Employee Hours Worked Export

Calculations

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 1^st – 31^st July and be furloughed for the remaining 86 hours. 

The employer can claim 80% of the employee’s usual salary for those furloughed hours. 

Paid Employment

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

Furloughed Hours

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

Pension

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