From 1st July employees can return to work part-time and be furloughed for the remaining usual work time not worked.
Employers claiming for the Coronavirus Job Retention Scheme (CJRS) ‘part 2’ must calculate the employees ‘usual’ and ‘furloughed’ hours to calculate their claim.
From 1st July, employers will:
- only be able to claim for employees who had previously been furloughed for 21 or more consecutive days (taking place any-time between 1st March 2020 and 30th June 2020)
- be able to flexibly furlough – bring employees back to work for any amount of time, and any work pattern
- still claim furlough grant for hours flexibly furloughed employees do not work.
Record keeping requirements
Keep a copy of all records for 6 years, including:
- the amount claimed and claim period for each employee
- the online claim reference number for your records
- the calculations used in case HMRC need more information
- usual hours (including how these were derived)
- actual hours worked
Work out usual hours – fixed hours with no variable pay
Calculate usual hours for each pay period, or part that falls within the claim period.
- Start with the hours contracted at the end of the last pay period ending on or before 19 March 2020.
- Divide by the number of calendar days including non-working days.
- Multiply by the number of calendar days in the pay period being claimed
- Round up to a whole number.
If on annual leave, sick or on family related statutory leave at any time during the last pay period ending on or before 19 March, the usual hours should be calculated as if the employee had not taken that leave.
Work out usual hours – variable hours worked
Where pay varies, employers must show the number of hours worked on your employees’ payslips in line with Employment Rights Act 1996, section 8. You are therefore likely to have records of the number of hours worked.
‘Usual hours’ is calculated based on the higher of either:
- the average number of hours worked in the tax year 2019 to 2020
- the corresponding calendar period in the tax year 2019 to 2020
Calculate the usual hours for each pay period, or part period that falls within the claim period.
When you calculate the usual hours, you should include:
- any hours of leave for which the employee was paid their full contracted rate (such as annual leave)
- any hours worked as paid ‘overtime’
Work out the usual hours for each pay period (or part period):
- Start with the number of hours worked (including paid leave) in the tax year 2019 to 2020 before the employee was furloughed, or the end of the tax year if earlier.
- Divide by the number of calendar days the employee was employed in the tax year 2019 to 2020, up until the day before they were furloughed, or the end of the tax year if earlier.
- Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
- Round up to the next whole number if the outcome isn’t a whole number.
Work out your employee’s usual hours if they are paid per task or piece of work done
Work out usual hours in the same way as for variable hours, if possible.
If you do not know what hours the employee worked, estimate the hours based on the number of ‘pieces’ produced and the average rate used for national Minimum Wage compliance.
Opinion
To be able to utilise Flexible Furlough, employers need to measure time accurately. Employees who would generally undertake unmeasured work cannot continue doing so if being flexibly furloughed.
Employers and payroll will need to undertake calculation tasks to determine USUAL HOURS. And facilities required to accurately measure actual hours worked.
Where flexible furlough involves home working, a means of time capture will be required.
Employers must ensure the accurate 100% payment of actual work done ensuring compliance with NMW and other contractual and legal requirements.
The usual hours and normal hours are used to calculate the grant proportion and furlough payments. It’s all about maths.
Flexible Furlough is a means of getting Britain working and continuing to ensure that Britain is paid.
PAYadvice.UK 15/6/2020
