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Flexible furloughing - Normal/Average hours examples

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Summary

To help you calculate the normal and actual hours to make your Job Retention Scheme claim to HMRC, which you can do in Sage 50cloud Payroll, we've put together some examples.

Description

This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express, or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example, to ensure that the results obtained from using our software comply with statutory or regulatory requirements.

For Employers, PAYE and general tax enquiries you should call HM Revenue and Customs (HMRC) National Advice Service Helpline on 0300 200 3200, contact your local HMRC office or visit their website at www.hmrc.gov.uk In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.

Employees with fixed hours

The normal hours are based on the employee's contract hours as of a particular date, depending on when they qualified for furlough.

If the employee qualified under the original Job Retention Scheme from March 2020, their normal hours are based on their contracted hours as of 19th March 2020.

If the employee only qualified under the extended Job Retention Scheme from November 2020, their normal hours are based on their contracted hours as of 31st October 2020.

To work out the normal hours in each tax period:

  1. Calculate the daily hours value by dividing the contracted hours by the number of calendar days they're based on.
  2. Multiply the daily hours by the number of days in each tax period within the claim period. You then need to round to the nearest whole hour.

Example

An employee that's paid monthly and is furloughed from 01/07/2020 to 31/07/2020. The employee normally works 40 hours per week.

The Job Retention Scheme Module breaks up the furlough period into the two tax months that the furlough period covers. This means that there are five days of the first tax month and 26 days of the second tax month in the furlough period. You need to enter the normal hours and actual hours worked for each tax period that you're making the claim for.

The first part of the calculation is the first tax month from 01/07/2020 to 05/07/2020. 

  1. 40 hours / 7 calendar days = 5.71 daily hours
  2. 5.71 daily hours x 5 working days in tax month = 29 hours (rounded to the nearest whole hour)
    You then calculate the hours in the second tax month from 06/07/2020 to 31/07/2020.
  3. 5.71 daily hours x 26 working days = 149 hours (rounded to the nearest whole hour)

NOTE: You must also enter the actual hours worked for each tax period.


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Employees with variable hours

To calculate the normal hours for an employee whose hours vary, you need to work out the average hours worked in the 2019/2020 tax year, up to the point that the employee was furloughed.

You then need to compare this value to the hours worked in the same pay periods, that you're claiming for, in the 2019/2020 tax year. You then use the higher amount as the employee's normal hours.

NOTE: As you can only claim for dates in the same calendar months, you may need to calculate your claim for part-periods at the start or end of the month.

Example

An employee that is paid weekly worked an average of 25 hours per week in 2019/2020. The employee has been flexibly furloughed from 1 to 31 July 2020 so we need to compare the hours worked in the same weeks in 2019/2020 to find out if this is higher than the average of 25 hours per week in 2019/2020.

TIP: To help you find the amount of hours worked in the previous tax year, you can use the Payment Type History report. To find this click Reports then click Employee.

We need to claim for each week running from Monday to Sunday:

  • 1 - 5 July (tax week 13) is a part-week of five days. The normal hours need to be adjusted by using the employee's daily hours multiplied by five days.

    TIP: In this example, the average hours of 25 hours per week was higher than the hours worked in the same period last year. We divide the 25 hours by seven to get the daily hours = 3.57 hours. We then need to multiply the daily hours by the number of days (five) in the tax period you're claiming for. This comes to 18 hours (rounded up).

  • 6 - 12 July (tax week 14) is a full-week.
  • 13 - 19 July (tax week 15) is a full-week.
  • 20 - 26 July (tax week 16) is a full-week.
  • 27 - 31 July (tax week 17) is a part-week of five days. The normal hours need to be adjusted by using the employee's daily hours multiplied by five days.

NOTE: You must also enter the actual hours worked for each tax period.


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Flexible furlough tracker - Fixed hours

To help you record your employees' normal and actual hours when calculating flexible furlough claims, we've created some handy Excel spreadsheets. The spreadsheet in this section is to help you calculate the hours for employees whose hours are fixed. If you need help with employees whose hours are variable, refer to the Flexible furlough tracker - Variable hours section.

 CAUTION: We've designed these trackers to help you record normal and actual hours for flexibly furloughed employees in the Job Retention Scheme Module. As this is general guidance, no guarantees can be made concerning its suitability for your particular needs. It's your responsibility to check that all information used to calculate your Job Retention Scheme claim is accurate and in line with HMRC's guidance.

Run the flexible furlough tracker - Fixed hours spreadsheet

  1. Click the link below:
  2. Open the downloaded file, Flex furlough hours - Fixed.xlsx.
  3. Enter the contracted hours per period.
    For example, 40 hours per 7 days.
  4. At the bottom of the spreadsheet, click the required month's tab.
  5. Enter the Actual hours worked for each day in the required period.
  6. You can then view the Normal/Actual hours breakdown by tax period for the relevant pay frequency.

Flexible furlough tracker - Variable hours

To help you record your employees' normal and actual hours when calculating flexible furlough claims, we've created some handy Excel spreadsheets. The spreadsheet in this section is to help you calculate the hours for employees whose hours vary. If you need help with employees whose hours are fixed, refer to the Flexible furlough tracker - Variable hours section above.

CAUTION: We've designed these trackers to help you record normal and actual hours for flexibly furloughed employees in the Job Retention Scheme Module. As this is general guidance, no guarantees can be made concerning its suitability for your particular needs. It's your responsibility to check that all information used to calculate your Job Retention Scheme claim is accurate and in line with HMRC's guidance.

Run the flexible furlough tracker - Variable hours spreadsheet

  1. Click the link below:
  2. Open the downloaded file, Flex furlough hours - Variable.xlsx.
  3. In Furlough start date, enter the earliest date that the employee was furloughed.
  4. If the employee's start date was after 6 April 2019, enter the date they started working for you in Employee start date.
  5. Enter the total amount of hours worked in the 2019/2020 tax year into Hours worked in tax year.
  6. At the bottom of the spreadsheet, click the required month's tab.
  7. For each week, enter the Hours worked in 2019/20 in column B.
    Alternatively, enter the hours worked in2019/2020 for each day in the required period.
  8. Enter the Actual hours worked for each day in the required period.
  9. You can then view the Normal/Actual hours breakdown by tax period for the relevant pay frequency.
    The normal hours automatically shows the higher of the average hours worked in 2019/2020 and hours worked in the same period in 2019/2020.

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