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HMRC confirms usual hours calculation for flexible furlough

As many businesses will be aware ‘Flexible furlough’ was introduced this week (1st July) which allows employees to work only part of the week, or weeks on rotation.  The employer will pay for the hours that the employee works, and the Government will subsidise the part they don’t work with furlough. As anticipated the calculations released by HMRC are not straight forward and employers will need to be careful that they work through the examples to make sure they understand the calculations. Given the complexity it will be easy to make mistakes that potentially will come to light as HMRC audit companies and their furlough claims. We expect HMRC to apply sanctions to those that they perceive have abused the furlough system, so making sure that your furlough claims are correct is all the more important.

For the period of the claim the employer must enter usual working hours, and actual working hours.  The difference between the two are the furloughed hours on which the grant claim is based. HMRC’s new published guidance gives instructions on how to calculate usual hours for an employee who is contracted for a fixed number of hours and those whose pay does not vary according to the number of hours they work.

You need to calculate the usual hours for each pay period or part of a pay period that falls within the claim period.

Below is an example of an employee who is contracted to work 35 hours per week but has only worked 31 hours. The result of the calculations is 155 usual hours in July that the employer will claim furlough for.

1.The hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.35
2.Divide by the number of calendar days in the repeating working pattern, including non-working days.35/7=5
3.Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for5×31=155
4.Round up to the next whole number if the outcome isn’t a whole number.155


We would add that the common-sense approach – and one that many businesses will have taken –– would be to look at a calendar and count the hours – i.e. 161 hours for July (23 working days Monday to Friday days x 7 hours a day).

However, HMRC have now confirmed that this is the incorrect approach! A number of businesses will have calculated their flexible furlough in this way and as such their calculations will be incorrect, resulting in the grant they receive being less than they expected.

The HMRC guidance is helpful, however if you need some assistance in interpreting the rules please do not hesitate to contact us.


The information was correct at time of publishing but may now be out of date.

Posted by Lisa Wilson
3rd July, 2020
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