From 1 July 2020, furloughed employees can return to work on a part-time basis. Other changes are also being made to the Coronavirus Job Retention Scheme (CJRS) from this date, including to the way in which claims will need to be submitted. In addition, from 1 August, employers will be required to cover the full cost of employer pension contributions (and employer NICs) even for periods when a furloughed employee is not working. These changes are summarised in our recent blog on the changes to the CJRS that were announced on 29 May 2020.

New complexities

The introduction of partial furlough (from 1 July) and the requirement for an employer to cover the full cost of employer pension contributions (from 1 August), will introduce new complexities into the calculation of employer and employee pension contributions and into the amount that employers can claim under the CJRS (for July).

In particular:

  • Where a furloughed employee returns to work part-time on or after 1 July, employers will be required to cover the cost of the employer pension contributions (and employer NICs) payable in respect of that employee for any hours that they work. These contributions will need to be paid at the usual rate (i.e. ignoring any reduction to the employer contribution rate that applies during furlough) and based on the employee’s normal (i.e. non-furloughed) salary. For July, the employer will continue to be able to claim back the cost of the employer pension contributions payable on the individual’s furlough salary (up to 3% of the employee’s “qualifying earnings”) for the normal hours that the individual does not work.
  • From 1 August 2020, the amount of support provided under the CJRS will be tapered and employers will be required to cover the full cost of employer pension contributions (and employer NICs) even for hours not worked from 1 August onwards. Where an employer has agreed to pay a lower contribution rate while an employee is on furlough they will only be required to pay contributions based on that lower rate for any hours not worked while an employee remains on furlough. However, if a furloughed employee returns to work part-time, the employer will need to ensure that
    • employer and member pension contributions for hours not worked are calculated by reference to the rate and on the basis that applies under the furlough agreement put in place with the relevant employee, and
    • employer and member pension contributions for any hours worked are calculated by reference to the contribution rate that would ordinarily apply (i.e. ignoring any reduction in the employer and employee contribution rates that applies during furlough) and based on the employee’s normal (i.e. non-furloughed) salary.
  • Additional complexities will arise, and extra care will need to be taken, where an employee pays their pension contributions via a salary sacrifice arrangement, as an employer may be required to cover the cost of some or all of the employee’s pension contributions (for any normal hours not worked) in addition to the employer pension contributions attributable to any non-worked hours. The employee’s own pension contributions can be deducted by way of salary sacrifice in the usual way (assuming the salary sacrifice arrangement has not been brought to an end) for any hours that the employee is working (and being paid their usual contractual salary) in accordance with a partial furlough agreement.

This additional complexity in the calculation of pension contributions and the amount that can be reclaimed in respect of employer pension contributions for July will be compounded by the changes that are being made to the way in which employers make a claim under the CJRS from 1 July onwards.

Making a claim – Changes from 1 July 2020

The updated Steps to take before calculating your claim guidance confirms that, from 1 July, claims can only cover days within one calendar month, but this does not prevent the furlough itself from overlapping months – there is no need for an employee’s furlough to be ended and restarted with each month-end.  For some employers, claim periods may well differ from pay periods. This will introduce extra complexity.

In particular, the updated guidance provides that:

  • Claims for any furlough periods starting before 1 July must end on or before 30 June (and be submitted by 31 July 2020).  Separate claims will need to be submitted to cover the days in June and the days in July, even if employees are furloughed continuously.
  • Claim periods starting on or after 1 July must start and end within the same calendar month and must last at least 7 days unless claiming for the first few days or the last few days in a month. Employers can only claim for a period of fewer than 7 days if the period they are claiming for includes either the first or last day of the calendar month, and they have already claimed for the period ending immediately before it.
  • Employers can only make one claim for any period so must include all furloughed or flexibly furloughed employees in one claim, even if they are paid at different times. 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.  Employers using flexible furlough should ideally claim only once they are sure of the exact number of hours being worked during the claim period. If claims are made in advance and turn out to be too high, the overclaim must be paid back.
  • Where an employee is flexibly furloughed, the employer will need to calculate “usual hours”. This is because the 80% grant available and the monthly cap are reduced to reflect the proportion of “usual hours” that will be furloughed (so if the employee is to work 50% of usual hours, the grant will be half of 80% of usual wages subject to a monthly cap of £1,250). An employee’s “usual hours” will need to be determined as followed:
    • for those who are contracted to work a fixed number of hours and whose pay does not vary according to hours worked, the “usual hours” are the contractual hours as at the end of the last pay period ending on or before 19 March 2020
    • for those on variable hours and pay, the “usual hours” are the higher of either the average number of hours worked in the tax year 2019 to 2020, or the corresponding calendar period in the tax year 2019 to 2020, including any hours of leave for which the employee was paid their full contracted rate (such as annual leave) and any hours worked as ‘overtime’ where pay for those hours was not discretionary, and
    • for piece workers, the same applies as for variable hours workers, but if the hours worked are unknown, the hours should be estimated based on the number of ‘pieces’ produced and the average rate of work per hour.

The Calculate how much you can claim guidance sets out how to do the rather complicated calculations required, including for flexible furlough and once the employer contributions increase in stages from August to October.  A new example of calculating a claim for a flexibly furloughed employee has been published and the previous examples of calculations have been updated.  A cold flannel is advised.

The Claim for wages guidance confirms that the information required for a claim will include the number of “usual hours” the employee would work in the claim period, the number of hours they will or have worked, and the number of furloughed hours in the claim period.  Records of this information and also the calculations required to calculate the usual hours should be kept. The guidance also includes some new text explaining how errors made in claiming will be addressed.  If a further claim is being made, that will be adjusted to reflect a previous overpayment; a process is being worked on to recover overclaimed amounts if no new claims are planned.  If there has been an underclaim, the employer should contact HMRC to amend the claim, as it will need to conduct additional checks.

Latest news

For more information on the latest pensions and employment developments in relation to the CJRS and COVID-19 more generally, check out our employment blog and recent posts on our UK pensions blog.

Contact us

Please get in touch with your usual HSF contact if you would like to discuss any of the issues outlined in this blog.


Tim Smith
Tim Smith
Professional Support Lawyer, London
+44 20 7466 2542








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