**Calculating the coronavirus job retention scheme grant.**

I am trying to understand the rationale for the calculation of the grant payable under the coronavirus job retention scheme (CJRS) applicable from 1 July 2020 for part-time furloughing. HMRC’s guidance on 12 June 2020 appears to use calendar days for the basis of the calculation which seems to produce somewhat inconsistent results in some circumstances.

For example, an employee on a fixed monthly salary of £2,000 will have daily pay of £64.52 for July 2020 (31 days). If they are furloughed each Wednesday (a total of five days), the grant receivable for that month is £258.08 (£322.60 at 80%) ignoring any claim for employer’s National Insurance and pension contributions). But if, instead, the employee is furloughed every Friday (again, a total of five days) so they return to work each Monday, I understand that the furlough periods then include Saturdays and Sundays (not normal working days), making a total claim for the month of £671.01 (calculated as 13 days at 64.52 x 80%).

If the calculation was, instead, to be based on normal working days, this would produce the same result regardless of which day of the week (Monday to Friday) the employee is furloughed. Using the above example, there are 23 normal workdays (Monday to Friday) in July 2020, making a daily pay rate of £86.96. The claim for the five days furloughed would then amount to £347.84 (being £434.80 at 80%).

Could readers please confirm (or otherwise) the following points.

First, it is not permissible to calculate the grant based on normal working days. Second, if calendar days must be used to calculate the grant, it is valid to include Saturday and Sunday (not normal working days) in the overall number of days for the furlough period used for computing the grant so long as each preceding Friday is not worked. Third, if the day of not working is a Monday (instead of Friday), the preceding Saturday and Sunday cannot be included in the overall number of days for the furlough period.

*Query 19,598 – Billy.
*

#### Calculation of the CJRS grant is different from payroll computations.

If it helps by way of reassurance, I suspect that Billy’s confusion is shared by many employers.

On Billy’s first point, it is not possible to calculate the grant based on normal working days. In both the CJRS scheme 1 and scheme 2, the direction requires us to use calendar days.

This may feel counterintuitive because it is not what we do when we calculate contractual payments through a payroll, but we need to separate the two activities. Running the payroll is based on the employee’s terms and conditions, which in many cases will simply be a Monday to Friday allocation of hours, whereas the CJRS is the claiming of a government grant so the formula is set in an entirely different way by HMRC.

On the second and third points, the furloughed hours in a flexi-furlough claim are the usual hours for the claim period less the worked hours; the pattern of worked days is not relevant. We do need to use a combination of calendar days because that gives us ‘usual hours’ and worked hours which is based on the hours per working day.

Looking at Billy’s case, the missing piece of the jigsaw is the hours that the employee works because the starting point for the calculation in a flexible furlough claim is the calculation of ‘usual hours’.

So we will make an assumption, for the purposes of illustration, that the person is working a 40-hour week of five days of eight hours a day.

The calculation is then as follows:

- Step 1. Usual hours for July is 178, being 40/7 x 31 = 177.14 which is rounded up to the next whole number.
- Step 2. Worked hours is 144 hours calculated as 40/5 x 18 days.
- Step 3. Furloughed hours is 34 being 178 – 144 hours.
- Step 4. The wage grant to be claimed is £305.62 being £2,000/178 x 34 = £382.02 x 80%.
- Step 5. Check this does not exceed the daily cap for July of £1,048.45 calculated as £80.65 x 13. It does not, so £305.62 can be claimed.

Carefully working through the above steps should yield the correct result for similar CJRS claims. – *Kate Upcraft*.

#### Follow the steps on HMRC’s website and make use of calculator.

HMRC’s guidance at tinyurl.com/y9jh9g7j explains that the first step is to calculate the employee’s usual hours. This depends on their working arrangements, but this should be straightforward for a monthly paid employee contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work. HMRC says that to calculate the number of usual hours for each pay period (or partial pay period):

1) start with the hours the employee was contracted for at the end of the last pay period ending on or before 19 March 2020;

2) divide by the number of calendar days in the repeating working pattern, including non-working days;

3) multiply by the number of calendar days in the pay period (or partial pay period) for which a claim is being made; and

4) round up or down if the result is not a whole number.

The big question is therefore the usual hours in the ‘repeating working pattern’ – a week. If it is ‘nine to five’ this would be 40 hours a week (step 1 above). Divide this by seven days in the week (step 2) and multiply by 31 – the days in the July pay period (step 3). Rounding up, this gives 178 hours.

We must then calculate the number of working and furloughed hours. If the employee works four days a week – whether they were furloughed on Wednesdays or Fridays in July – they will work for 18 days. At eight hours a day this is 144 hours so they will be furloughed for 34 hours (178 – 144).

Information on this second stage is at tinyurl.com/y9xlg4ex. Also on that page is a calculator and if we enter the above information for the period 1 to 31 July for £2,000 this tells us that the grant is £305.62. – *Brumus*.