New guidance regarding the flexible furlough scheme was issued on the evening of 12 June 2020. The guidance is complex and not straightforward.
From 1 July 2020, it will be possible for employers to have furloughed employees work part time and still claim for hours not worked under the CJRS.
For those with fixed hours: usual contractual hours at the end of the last pay period on/before 19 March.
For those with variable hours: the higher of: (i) average number of hours worked in 2019/20 tax year or (ii) number of hours worked in the corresponding month/period in 2019/20 tax year.
Worked example: An employee is contracted to work 40 hours a week so their usual hours are 40 hours a week. The employer claims for the entire month of July under the CJRS. To work out daily hours, calculate 40/7. Then multiply this number by the number of days in the claim period (there are 31 days in July). Round up to the nearest whole number - here 177.14 is rounded up to 178. Therefore, the usual hours for July are 178.
For an employee on full furlough, 80% of wages, capped at £2,500 a month.
For an employee on flexible furlough, the cap is a proportionate amount based on the number of furlough hours (i.e. hours when the employee is not working). To calculate the number of furlough hours, calculate the number of usual hours in the claim period and subtract the number of hours actually worked in that period.
Worked example: An employee's usual hours are 178. The employee works 92 hours in July. The number of furlough hours in July are therefore 86 (178 - 92). Calculate the fraction of furlough hours as against the number of usual hours (86/178) and apply it to £2,500 to calculate the maximum monthly amount that can be claimed under the CJRS. So, in this example, £1,207.87.
Simon Gorham, partner, Boodle Hatfield (sgorham@boodlehatfield.com)
New guidance regarding the flexible furlough scheme was issued on the evening of 12 June 2020. The guidance is complex and not straightforward.
From 1 July 2020, it will be possible for employers to have furloughed employees work part time and still claim for hours not worked under the CJRS.
For those with fixed hours: usual contractual hours at the end of the last pay period on/before 19 March.
For those with variable hours: the higher of: (i) average number of hours worked in 2019/20 tax year or (ii) number of hours worked in the corresponding month/period in 2019/20 tax year.
Worked example: An employee is contracted to work 40 hours a week so their usual hours are 40 hours a week. The employer claims for the entire month of July under the CJRS. To work out daily hours, calculate 40/7. Then multiply this number by the number of days in the claim period (there are 31 days in July). Round up to the nearest whole number - here 177.14 is rounded up to 178. Therefore, the usual hours for July are 178.
For an employee on full furlough, 80% of wages, capped at £2,500 a month.
For an employee on flexible furlough, the cap is a proportionate amount based on the number of furlough hours (i.e. hours when the employee is not working). To calculate the number of furlough hours, calculate the number of usual hours in the claim period and subtract the number of hours actually worked in that period.
Worked example: An employee's usual hours are 178. The employee works 92 hours in July. The number of furlough hours in July are therefore 86 (178 - 92). Calculate the fraction of furlough hours as against the number of usual hours (86/178) and apply it to £2,500 to calculate the maximum monthly amount that can be claimed under the CJRS. So, in this example, £1,207.87.
Simon Gorham, partner, Boodle Hatfield (sgorham@boodlehatfield.com)