A question I am commonly being asked, and an issue which seems to be unclear to both employees and employers, is what happens to employees who had agreed to reduce their hours on return to work from furlough, to now subsequently be re-furloughed under the extended scheme?  In those circumstances, are the employee’s hours for a furlough claim the previous ‘full’ hours or the new ‘shorter’ hours?

It seems to us the HMRC have clarified this issue in their Guidance on calculating claims, though we note that the Guidance does change regularly so it is always worth reading it before calculating your claims each time. 

For employees with fixed normal working hours HMRC say to start the claim by working out the hours your employee “was contracted for at the end of the last pay period ending on or before 19 March 2020”, ignoring any period of leave in that pay period e.g. sickness absence, holiday, or maternity/parental leave.  This suggests that the claim should be based on the pre-furlough hours.

The situation is similar for employees without fixed hours e.g. shift work.  Here you should take the number of hours worked in the 2019/20 tax year to work out the employee’s ‘normal working hours’.  Again, suggesting it is the pre-Covid hours which should form the basis of the claim.

It appears that HMRC have intended that the scheme is used in a manner which means that employees are not penalised either because their employer has not be able to offer them their usual hours during Covid, or because they have taken steps to assist their employer (such as accepting reduced hours) whilst the pandemic is ongoing.

Should you have any queries about the issues raised in this article, or on any employment related matter, please contact our expert Arvin Sandhu by email or on 01494 893 542.