Flexible Furlough Calculations

22 Jun 2020

What are usual hours for flexible furlough calculations?

18 June: ICAEW’s Tax Faculty advises: Do not simply rely on your calendar when making claims under the second iteration of the Coronavirus Job Retention Scheme from 1 July.

The Tax Faculty hopes to be able to shortly re-publish our illustration showing our revised understanding of the CJRS (Coronavirus Job Retention Scheme) flexible furlough calculations. The difficulty is all about the "usual working hours", which are not the usual working hours you might expect at all, but are simply an estimate.

Key to getting the answers HMRC wants you to get from its furlough grant claim calculator, are the hours you feed in. For the period of the claim you must enter:

  • total usual hours, and
  • actual working hours.

The difference between these is the furloughed hours on which the grant claim is based. Unfortunately, total usual hours are not as you might imagine.


Employee works 35 hours per week and is paid on the last working day of each month. What are Bob's usual working hours?

The calendar answer is not the correct answer

If you look at a calendar and count the hours, you come to 161 hours for July (23 working days Monday to Friday days x 7 hours). But this is the wrong answer for this purpose.

The correct answer to 'what are usual hours'?

The Tax Faculty has found three possible answers.

Turning to HMRC's published guidance, the instruction for working out an employee’s usual hours for an employee who is contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work, is as follows:

“You need to calculate the usual hours for each pay period, or part of a pay period, that falls within the claim period.

“To calculate the number of usual hours for each pay period (or partial pay period):

 1. Start with the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020. 35
 2. Divide by the number of calendar days in the repeating working pattern, including non-working days. 35/7=5
 3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for. 5x31=155
 4. Round up to the next whole number if the outcome isn’t a whole number. 155

The answer would appear to be 155 usual hours in July for employee.

Guidance given to software providers

HMRC’s guidance to software providers on 5 June is different to the above. This guidance says the usual working hours are based on an average taken over a full calendar year.

To make a claim for the calendar month of July for a monthly paid individual the calculation becomes: 35 hours x 52 weeks / 12 months = 151.67 per month.

Although HMRC's guidance to employers says to round up to the nearest whole number, which would give 152, the software spec suggests to round down. This would give usual working hours of 151. The Tax Faculty will confirm which is to be used as soon as it can, as you may be offered a module in your payroll software that will have been built using this formula.

So is it 151, 152, 155 or 161? Probably one of the first three, although reason would indicate the last. We shall have to wait to see.


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