Extended CJRS – conditions and calculations

05 November 2020

A policy paper, published by HMRC examines some of the conditions around claiming under the Coronavirus Job Retention Scheme (CJRS), and also provides detail around the calculations that must be used for arriving at reclaim amounts, and usual hours worked.

There are a number of conditions that need to be considered when claiming the CJRS.

Employee taxes

Employees are required to pay taxes as normal from their wages, so employers must deduct Income Tax and employee National Insurance (NI) contributions on the full amount paid to employees, inclusive of any scheme grant. This will also need to be reported and paid across to HMRC as usual. The grant does not cover employers’ NI or pension contributions, but these must also be paid to HMRC.

Employer and employee agreement

There is no requirement for businesses to place all of their staff on furlough, and employees can be fully furloughed if they wish, but employees are not permitted to carry out any work for their employer during the hours that they are recorded as being on furlough.

Flexible furlough agreements can be implemented for any amount of time, and there can be numerous flexible furlough arrangements made between employee and employer. Whilst flexible furlough agreements can last for any duration of time, the period claimed for must be for a minimum of seven consecutive calendar days.

Employers are able to fully furlough employees, so that they carry out no work for the employer, or have the option of flexibly furloughing employees, meaning that employees can work for any amount of time, on any work pattern, and employers can claim the grant for furloughed hours with reference to hours the employee would have ordinarily worked in that period.

Employers should hold discussions with staff and make any changes to employment contracts by agreement. Employment, equality and discrimination laws are applicable to the CJRS process, including when deciding who is to be placed on furlough. Employers must have confirmed in writing to their employee, or reached collective agreement with a trade union, that they have been either fully or flexibly furloughed.

Employers must ensure that the agreement is consistent with employment, equality and discrimination laws, they must keep a written record of the agreement for five years and also keep records of how many hours their employees work, and also the number of hours they are furloughed for, for a minimum of six years. There is no requirement, however, for employees to provide a written response.

The terms of any agreement must accurately reflect the hours an employee has actually worked or has not worked over the period of the agreement. The agreement must also allow the employer to satisfy the terms of CJRS enabling them to make a claim in relation to any hours not worked.

Flexible furlough or furlough agreements made retrospectively, with effect from 1 November 2020, are valid for the purposes of CJRS claims, as long as they are made in accordance with the conditions above. Only retrospective agreements implemented up to and including 13 November 2020 can be relied on for the purposes of a CJRS claim.


The policy paper provides details of calculations for CJRS claims for periods starting on or after 1 November 2020.

There is a reminder that claims up to and including 31 October 2020 must be submitted by no later than 30 November 2020.

Employees included on an RTI submission or, or prior to, 19 March 2020, will be able to use the CJRS calculations as applied in August 2020 for reference pay and usual hours. If, however, an employee was hired between 10 March 2020 and 30 October 2020, then the CJRS methodology will update the reference pay and usual hours to account for the period covered by the extension.

Any employees on fixed pay who were employed on, or following, 20 March 2020, will have the last pay period prior to 30 October 2020 used as the basis for the calculation. Any employees on variable pay or hours, who were employed after 20 March 2020, will have the average of tax year 2020-21 used as the basis for the calculation.

Previously eligible employees

For any employees who were eligible under the original CJRS, the existing calculation of 80% of usual wages and hours will apply, even in scenarios where a claim was not made in respect of those employees under CJRS to 31 October 2020.

If an employee was not previously eligible for the scheme, then the calculation takes account of updated reference periods. Further guidance on the calculation will be issued on 10 November 2020.

For claims relating to the dates between 1 November 2020 and 31 January 2021, employers will be entitled to claim a grant for 80% of usual wages, up to a maximum of £2,500 per month for the time that the employee spends on furlough.

Employers are required to pay their employees for the time worked and the Government grant for time not worked, they will need to operate PAYE on behalf of their employees and they must pay the employer NI and pension contributions for employees on the full amount that they pay to employees.

Employers are able to top up employee wages above the 80% if they wish, but this is not mandatory, and would be at the employer’s own expense.

Reference pay: calculating 80% of wages

For employees who were not previously eligible for CJRS, 80% of wages should be calculated as follows:

  • Fixed salary – 80% of wages payable in the last pay period ending on, or before, 30 October 2020
  • Variable pay – 80% of the average pay between the start date of employment or 6 April 2021 (whichever is later) and the day before their CJRS extension furlough period begins

80% of wages is capped at the maximum wage amount, which is calculated in the same way as it was under the initial CJRS.

Usual hours for an employee with a fixed number of hours, where pay does not vary on the basis of the number of hours worked

If an employee was not previously eligible for the CJRS, then the usual hours for an employee contracted to work a fixed number of hours, where their pay does not vary on the basis of the number of hours they work, will be the contracted hours worked in the last pay period ending on or before 30 October 2020.

An example is provided:

“Sam has been employed by A Ltd since April 2020. A Ltd was not eligible to claim a CJRS grant for Sam. Sam is paid weekly. Sam has always been contracted to work a fixed number of hours per week (30 hours), and their pay does not vary according to the number of hours they work.

For the claim period 16 November 2020 to 22 November 2020, Sam’s usual hours will be 30 hours, being the number of hours Sam was contracted for on 25 October 2020, the end of the last pay period ending before 30 October.”

Usual hours for employees who work variable hours

If an employee was not previously eligible for the CJRS, then the usual hours will be the average hours worked between:

  • The start date of 2020-21 tax year
  • The day before the CJRS extension furlough period commences


The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.