Find out what steps you need to take before you calculate how much you can claim for furloughed and flexibly furloughed employees.

If you’re using the Coronavirus Job Retention Scheme to claim for employees’ wages, the steps you’ll need to take are:

1. Check if you can claim.
2. Check which employees you can put on furlough.
3. Steps to take before calculating your claim.
4. Calculate how much you should claim.
5. Claim for your employees’ wages online.
6. Report a payment in PAYE Real Time Information.

Before you can calculate how much you can claim from the Coronavirus Job Retention Scheme you’ll need to work out your employees’ wages. To do this you must work out:

• the length of your claim period
• what you can include when calculating wages
• your employees’ usual hours and furloughed hours

Find out about earlier claim periods by reading previous versions of this guidance on The National Archives.

Deciding the length of your claim period

Your claim period is made up of the days you are claiming a grant for. The start date of your first claim period is the date your first employee was furloughed.

Claim periods must start and end within the same calendar month and last at least 7 days.

You can claim for a period of less than 7 days if you’re claiming for the first few days or the last few days in a month. You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it.

You should match your claim period to the dates you process your payroll, if you can. You can only make one claim for any period so you must include all your furloughed or flexibly furloughed employees in one claim even if you pay them at different times. If you make more than one claim, your subsequent claim cannot overlap with any other claim that you make. Where employees have been furloughed or flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates.

You can claim before, during or after you process your payroll as long as your claim is submitted by the relevant claim deadline. You cannot submit your claim more than 14 days before your claim period end date.

When making your claim:

• you do not have to wait until the end date of the claim period for a previous claim before making your next claim
• you can make your claim more than 14 days in advance of the pay date (for example, if you pay your employee in arrears).

When claiming for employees who are flexibly furloughed you should not claim until you are sure of the exact number of hours they will have worked during the claim period. This means that you should claim when you have certainty about the number of hours your employees are working during the claim period. If you claim in advance and your employee works for more hours than you have told us about, then you will have to pay some of the grant back to HMRC. If you make an error in your claim, you can find out how to correct it.

Payments will be made six working days after you make your claim.

If the pay period you are claiming for includes days in more than one month

Claim periods must start and end within the same calendar month. For these months, if your pay period includes days in more than one month, you’ll need to submit separate claims covering the days that fall into each month. You should calculate each of those claims separately.

Claim periods cannot overlap, so you will need to make sure you include all of the employees you want to claim for in each claim you make.

Find an example of a pay period spanning two months.

What to include when calculating wages

If you’ve already claimed for an employee who was on furlough during October, and they are paid a fixed salary, you will follow the same usual wage calculation for claim periods after 31 October 2020.

The amount you should use when calculating 80% of your employees’ wages for hours not worked, is made up of the regular payments you are obliged to make, including:

• regular wages you paid to employees
• non-discretionary payments for hours worked, including overtime
• non-discretionary fees
• non-discretionary commission payments
• piece rate payments

You cannot include the following when calculating wages:

• payments made at the discretion of the employer or a client – where the employer or client was under no contractual obligation to pay, including:
  • any tips, including those distributed through troncs
  • discretionary bonuses
  • discretionary commission payments
• non-cash payments
• non-monetary benefits like benefits in kind (such as a company car), including benefits received in exchange for giving up an amount of pay under a salary sacrifice scheme
• employer pension contributions, including pension contributions received in exchange for giving up an amount of pay under a salary sacrifice scheme (you can still include pension contributions that the employee makes from their wages, such as through a Net Pay Arrangement pension scheme)
• amounts of pay given up under a salary sacrifice scheme

Find an example of calculating wages for different types of pension scheme.

The entirety of the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

Normally, an employee cannot switch freely out of most salary sacrifice schemes unless there is a life event. HMRC agrees that coronavirus counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

Non-discretionary payments

When you’re working out if a payment is non-discretionary, only include payments which you have a contractual obligation to pay and to which your employee has an enforceable right.

When variable payments are specified in a contract and those payments are always made, then those payments may become non-discretionary. If that is the case, they should be included when calculating 80% of your employees’ wages.

Non-discretionary overtime payments

If your employee has been paid variable payments due to working overtime, you can include these payments when calculating 80% of their wages as long as the overtime payments were non-discretionary.

Payments for overtime worked are non-discretionary when you are contractually obliged to pay the employee at a set and defined rate for the overtime that they have worked.

Apprenticeship Levy and Student Loans

You should continue to pay the Apprenticeship Levy as usual. Grants from the Job Retention Scheme do not cover the Apprenticeship Levy.

You should also continue to make Student Loan deductions from the wages you pay to employees.

National Minimum Wage

Individuals are entitled to the National Living Wage, National Minimum Wage or Apprentices Minimum Wage for the hours they are working or treated as working under minimum wage rules.

At least minimum wage rates must be paid for all hours worked. Furloughed workers who are not working can be paid the lower of 80% of their wages or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage.

However, time spent training whilst furloughed is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage rate. As such, employers will need to ensure that the wages and furlough payment provide sufficient monies to cover all working time including these training hours. Where the pay is less than the appropriate minimum wage entitlement, the employer will need to pay additional amounts to ensure at least the appropriate minimum wage is paid for both working time and 100% of the training time whilst furloughed.

Where a furloughed worker is paid close to minimum wage levels and asked to complete training courses for a substantial majority of their usual working time, employers are recommended to seek independent advice or contact Acas.

If you’re claiming for a member of a Limited Liability Partnership (LLP)

If a member of an LLP is treated as an employee (because of salaried members rules), you must only include payments that are either:

• fixed
• variable, but are varied without reference to the overall amount of the profits or losses of the LLP
• not affected by the overall amount of the LLP’s profits or losses

Holiday Pay

Furloughed employees continue to accrue leave as per their employment contract.

The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

Employees can take holiday while on furlough. If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours. Employees should not be placed on furlough for a period simply because they are on holiday. This means that employees should only be placed on furlough because your operations have been affected by coronavirus (Covid 19) and not just because they are on paid leave. This applies equally during any peak periods in late December and early January.

Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations (WTR).

Employers will be obliged to pay additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period.

If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.

Find out more information on holiday pay during furlough.

Employees returning from family-related statutory leave

Family-related statutory leave includes maternity leave, paternity leave, shared parental leave, adoption leave, parental bereavement leave and unpaid parental leave.

For employees on fixed pay, claims for full or part time employees furloughed on return from family-related statutory leave should be calculated against their salary, before tax, not the pay they received whilst on family-related statutory leave. The same principles apply where the employee is returning from a period of unpaid statutory family-related leave.

Employees returning to work after being on sick pay

For employees on fixed pay, claims for full or part time employees furloughed on return to work after time off sick should be calculated against their salary, before tax, not the pay they received whilst off sick.

Claims for those on variable pay, returning to work after time off sick, should be calculated using the normal rules for employees whose pay varies.

Unpaid sabbatical or unpaid leave

For employees on fixed pay, if your employee has been on unpaid sabbatical or unpaid leave during their reference period, you’ll need to use the amount they would have been paid if they were on paid leave when calculating 80% of their wages.

Work out your employee’s usual hours and furloughed hours

If your employee is fully furloughed, you do not need to work out their usual and furloughed hours and you should work out the maximum wage amount. An employee is fully furloughed if they do not do any work for you during the claim period.

If your employee is flexibly furloughed, you’ll need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period.

You can calculate the usual hours for the entire claim period or for each pay period, or part of a pay period, that falls within that claim period. This guidance assumes that you will calculate on a pay period basis but either method is acceptable.

If you calculate the usual hours for the entire claim period and the result is not a whole number, you should round it up to the next whole number. If you calculate the usual hours on a pay period basis you should round the result up or down to the nearest whole number.

There are two different calculations you can use to work out your employee’s usual hours, depending on whether they work fixed or variable hours.

You should work out usual hours for employees who work variable hours, if either:

• your employee is not contracted to a fixed number of hours
• your employee’s pay depends on the number of hours they work

If neither of these apply, you should work out your employee’s usual hours for an employee who is contracted for a fixed number of hours.

The employee’s working pattern does not have to match their pay period (for example, an employee could be contracted to fixed 40 hours a week, but be paid a variable monthly amount because of shift allowances). HMRC will not decline or seek repayment of any grant based solely on the particular choice between fixed or variable approach to calculating usual hours, as long as a reasonable choice is made.

Work out your 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

You’ll work out your employee’s usual hours (for employees with fixed hours), by looking at their contracted hours at the end of their reference period.

The reference period is the last pay period ending on or before 19 March 2020 for employees who either:

• were on your payroll on 19 March 2020 (meaning you made a payment of earnings to them in the tax year 2019 to 2020 which was reported to HMRC on a Real Time Information (RTI) Full Payment Submission (FPS) on or before 19 March 2020
• you made a valid Coronavirus Job Retention Scheme claim for them in a claim period ending any time on or before 31 October 2020

For all other employees, the employee’s reference period will be their last pay period ending on or before 30 October 2020. These employee’s will only be eligible for periods starting on or after 1 November 2020.

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 their reference period.
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) you are claiming for.
4. Round up or down if the result isn’t a whole number.

If an employee with fixed hours was on annual leave, off work sick or on family related statutory leave at any time during the last reference period, the usual hours should be calculated as if the employee had not taken that leave.

Find examples of how to work out usual hours for employees who are contracted for a fixed number of hours.

You can claim for fixed hours employees whose first pay period ends after 30 October 2020, if HMRC received the details of their wages on a PAYE Real Time Information (RTI) Full Payment Submission (FPS) on or before 30 October 2020 and the other eligibility conditions are met.

When you calculate the employee’s usual hours, use the hours they were contracted for at the end of the latest pay period for which a PAYE Real Time Information (RTI) Full Payment Submission (FPS) was submitted to and received by HMRC on or before 30 October 2020.

Find an example of calculating usual hours for a fixed hours employee whose first pay period ends after 30 October 2020.

Work out your employee’s usual hours for an employee who works variable hours

Where the pay varies by the amount of time worked, you will have shown the number of hours worked on your employees’ payslips in line with legislation introduced by BEIS in April 2019 (Employment Rights Act 1996, section 8). You are therefore likely to have records of the number of hours worked.

Employers should identify the hours the employee worked using pay records, time sheets and other records which show time worked. If these aren’t available then use other records, such as rotas or work diaries. If these records are not available, employers may use the pay rate to work back from gross pay.

You will use differing approaches to calculate your employee’s ‘usual hours’ for an employee who works variable hours depending on whether the employee has received a payment of earnings from you in tax year 2019 to 2020 which was reported on a Real Time Information (RTI) Full Payment Submission (FPS) to HMRC on or before 19 March 2020. For those who did, calculate ‘usual hours’ based on the higher of either:

• the average number of hours worked in the tax year 2019 to 2020
• the corresponding calendar period in a previous year

This also applies to employees for whom you made a valid claim in a claim period ending any time on or before 31 October 2020.

Otherwise calculate the average number of hours worked from 6 April 2020 and up to the employee’s first day spent on furlough on or after 1 November 2020.

If your employee has variable pay you will complete a similar comparison to calculate their usual wages but the result may be different.

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 ‘overtime’, but only if the pay for those hours was not discretionary

If you are calculating the usual hours for an employee who is part of a flexible work time arrangement (“flexi-leave”), you should:

• not count hours as hours worked that the employee worked but was not paid for because they accrued paid time off which they could take later
• count the hours as hours worked that the employee took as paid time off, which they had accrued by working additional hours at some other time

Averaging method for employees whose earnings were reported on an RTI FPS on or before 19 March 2020

To work out the usual hours for each pay period (or partial pay period) based on the average number of hours worked in the tax year 2019 to 2020:

1. Start with the number of hours actually worked (or on paid annual leave or flexi-leave) in the tax year 2019 to 2020 before the employee was furloughed, or the end of the tax year if earlier.
2. Divide by the number of calendar days the employee was employed by you in the tax year 2019 to 2020, up until the day before they were furloughed, or the end of the tax year if earlier.
3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
4. Round up or down if the result isn’t a whole number.

When you calculate the number of calendar days in step 2, you should not count any calendar days where the employee was on a period of:

• statutory sick pay related leave
• family related statutory leave
• reduced rate paid leave following a period of statutory sick pay related leave
• reduced rate paid leave following a period of family related statutory leave

Find examples of how to work out the average number of hours worked in the tax year 2019 to 2020 for an employee who works variable hours.

Calendar lookback method

When you work out the usual hours based on the corresponding calendar period in a previous year, the period you look back to depends on the period you are claiming for:

Claim Month	Lookback period
November 2020	November 2019
December 2020	December 2019
January 2021	January 2020
February 2021	February 2020
March 2021	March 2019
April 2021	April 2019

If your employee did not work for you in the lookback period, you can only use the averaging method to calculate their usual hours.

To work out the usual hours for a pay period or partial pay period based on the corresponding calendar period in a previous year:

1. Identify the pay periods that include at least one calendar day in the lookback period and correspond to at least one calendar day in the pay period (or partial pay period) you are claiming for.
2. If the pay period (or partial pay period) you are claiming for starts and ends on the same calendar days as the pay period identified in Step 1 – use the number of hours they actually worked in that pay period.
3. If the pay period (or partial pay period) you are claiming for does not start and end on the same calendar days as the pay periods identified in Step 1 – you’ll need to add together a proportion of the hours worked in each of the pay periods you’ve identified.

If your pay periods end on the last day of February you will need to adjust the number of hours worked, because 2020 being a leap year, means they will not end on the same calendar day

Find an example of how to work out the usual hours worked in the same period in a previous year for an employee who works variable hours and the pay period (or partial pay period) being claimed for starts and ends on the same calendar days as the identified pay period.

If you have to work out the usual hours based on the hours worked in more than one pay period in a previous year:

1. Start with the number of hours worked in the first pay period identified in the lookback period.
2. Multiply by the number of calendar days in that pay period which correspond to at least one calendar day in the pay period (or partial pay period) you are claiming for.
3. Divide by the total number of calendar days in the pay period identified in Step 1.
4. Repeat steps 1, 2 and 3 for each subsequent identified pay period in the lookback period.
5. Add them all together.
6. Round up or down if the result is not a whole number.

Find an example of how to work out the usual hours based on the hours worked in more than one pay period in a previous year..

Find an example of how to work out the usual hours based on the hours worked in more than one pay period in a previous year for March 2021 or April 2021.

Averaging method for employees whose earnings were not reported on an RTI FPS on or before 19 March 2020

To work out the usual hours for each pay period (or partial pay period) based on the average number of hours worked in the tax year 2020 to 2021:

1. Start with the number of hours actually worked (or on paid annual leave or flexi-leave) from 6 April 2020 and up to (and including) the day before the employee’s first day spent on furlough on or after 1 November 2020.
2. Divide by the number of calendar days the employee was employed by you in the tax year 2020 to 2021, up until the day before they were furloughed.
3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
4. Round up or down if the result is not a whole number.

When you calculate the number of calendar days in step 2, you should not count any calendar days where the employee was on a period of:

• statutory sick pay related leave
• family related statutory leave
• reduced rate paid leave following a period of statutory sick pay related leave
• reduced rate paid leave following a period of family related statutory leave

Find an example of how to work out the average number of hours worked in the tax year 2020 to 2021 for an employee who works variable hours.

Work out your employee’s usual hours if they are paid per task or piece of work done

You should work out the usual hours for these employees in the same way as for other employees who work variable hours, if possible.

If you do not know what hours the employee worked, you can estimate the hours based on the number of ‘pieces’ they produced and the average rate of work per hour (which you should already have worked out to comply with National Minimum Wage rules).

Calculating the number of working and furloughed hours for each employee

You will have agreed how many hours your flexibly furloughed employee is going to work in the claim period. They will be furloughed for the rest of their usual hours.

To calculate the number of furloughed hours:

1. Start with your employee’s usual hours.
2. Subtract the number of hours they actually worked in the claim period – even if this is different to what you agreed.

If you claim in advance and your employee works for more hours than you agreed, then you’ll have to pay some of the grant back to HMRC. This means that you should not claim until you have certainty about the number of hours your employees are working during the claim period. If you make an error in your claim, you can find out how to correct it.

You must pay the employee their contractually agreed rate for any hours they work. Check the latest National Minimum Wage rates.

Find an example for calculating the number of furloughed hours where an employee does not take leave during the claim period.

Calculating the number of working and furloughed hours for an employee that is furloughed or flexibly furloughed for part of a claim period

If your employee is only furloughed or flexibly furloughed for part of your claim period, when calculating the number of furloughed hours you can claim for make sure you:

• only calculate the employee’s usual hours for the days covered by the furlough agreement
• do not include any working hours on days not covered by a furlough agreement

This applies even if your claim period includes days before or after the employee’s furlough agreement (for example, because you’re claiming for multiple employees and some of them are furloughed for a different period).

If your employee takes leave while they are flexibly furloughed

You cannot claim for an employee under the scheme for any time they are on unpaid leave or statutory sick pay related leave.

You can claim for an employee who is on:

• annual leave
• leave taken on account of time worked under a flexible work time arrangement (flexi-leave)
• family related statutory leave
• reduced rate paid leave following a period of family related statutory leave

Any time they are on these types of leave while flexibly furloughed counts as furloughed hours and does not count as time actually worked.

What to do next

Once you’ve finished these steps, you can calculate your claim.