How To Claim Under The Flexible Furlough Scheme

On 17th December 2020, Chancellor Rishi Sunak announced that the Job Retention Scheme would be extended until the end of April 2021.

Since July, the Scheme offered the possibility of taking furloughed employees back to work on a part-time basis (Flexible Furlough), and the Government’s contribution to employees’ wages gradually decreasing.

While the Scheme kept its original form until the end of June, changes in its rules and how the grant amount is calculated kicked in starting on 1st July 2020.

In this short guide, we outline the main updates to the Scheme and how to correctly work out the grant amount in order to put in your next claim.

Unless specified, the eligibility rules stay the same as their original form, except that no new employees can be furloughed after the June pay period.

From 1 July 2020, employers can only claim for employees that had already been furloughed for at least 3 weeks. This does not include employees returning from parental leave after 10 June 2020, which remain eligible to be furloughed for the first time.

What changed on 1 July 2020?

1. Furloughed Employees can be brought back part-time

The most significant change to the Scheme is surely the possibility for furloughed employees to resume work on a part-time basis.

From 1st July, claims must be made based on the difference between hours worked and usual hours.

This means that, while employers are required to pay their employees for the number of hours they work, the Government provides 80% of wages for the remaining hours through a grant.

This does not directly affects how grants are claimed, but it must be noted that employers need to calculate the grant amounts based on the number of hours worked and the usual hours before claiming.

Below is a more detailed guide to calculating usual hours and claim amounts.

2. All claim periods must start and end within the same month

In order to facilitate grant amount calculations, from 1 July 2020 HMRC require employers to only put in claims that start and end within the same calendar month, and are not allowed to cover more than one payroll period.

Only one claim per period can be made, and claim periods cannot overlap. This means that each claim must contain all furloughed – or on flexible furlough – employees, even when they are paid at different times.

In order to simplify the claim process, we recommend that – where possible – claim periods match payroll periods, and that they end on the date that payroll is processed.

It is possible to make a claim before, during or after payroll is processed, even before the previous claim period has ended.

3. There is no more minimum furlough period

While the Scheme previously required employers to put in claims for a minimum period of three weeks, there is now no minimum claim period.

However, claims for periods shorter than one week are only allowed if:

• the period includes the first or last day of a calendar month;
• the employer made a claim for the period immediately prior.

4. The Government’s contribution to wages gradually decreased

While the Government still provided 80% of employees wages (for the hours not worked), plus Employer NICs and Pension Contributions for the whole of July, this changed starting in August.

Month after month, the Governments’s contribution to employees’ wages decreased, while employers are expected to top that up so that employees keep receiving 80% of the wages and their NICs and Pension Contributions are paid.

The changes are outlined, month by month, in the table below:

Government Contribution	July	August	September	October
Employer NICs & Pension Contributions	Yes	No	No	No
Wages	80% up to £2,500	80% up to £2,500	70% up to £2,187.50	60% up to £1,875
Required employer contribution	–	Employer NICs & Pension Contributions	10% up to £312.50 + Employer NICs & Pension Contributions	20% up to £625 + Employer NICs & Pension Contributions

As the Scheme was extended on 1 November, the Government will cover all 80% of employee’s regular wages, although employers will still be required to pay for the National Insurance and minimum pension contributions for their furloughed employees.

How to calculate usual hours and claim amounts

While the claim process hasn’t changed too much from its previous version, HRMC’s Job Retention Scheme Calculator has been updated to allow for flexible furlough.

By providing the number of hours worked during the claim period, in addition to the usual pay and hours, the calculator works out the claim amount to insert in your claim, as follows:

Pay based on furlough days:

Usual Pay ÷ Days in pay period × Days in claim period

Pay based on hours (not) worked:

Pay based on furlough days ÷ Usual hours × (Usual hours – Hours worked)

Grant amount:

80% of Pay based on hours (not) worked

It must be noted, however, as reported by ICAEW, that the calculation for the “usual hours” may be slightly counterintuitive

This, in fact, is not based on merely counting the working hours within a pay period, but it must be calculated by multiplying the average working hours per day by the number of days within the pay period.

So, for example, if an employee’s contract requires them to work for 35 hours per week, the usual hours for a 31-day month would equate: 35 ÷ 7 × 31 = 155 hours.

In general, when contracts require a certain number of work hours per week, usual hours are calculated as follows:

Weekly work hours ÷ 7 × Days in claim period