CJRS Claim Calculation Method
The following methodology is used by Payroll Manager to perform the various calculations required to determine claim amounts under the Coronavirus Job Retention Scheme. This methodology was issue to use by HMRC.
Calculation of the Gross Pay grant per employee
Take the lower of 1 and 2 below
1. £2500 (monthly) or £576.92 (weekly) x number of Furlough Days In Period / number of Days in Period
2. 80% of Reference Pay x number of Furlough Days in Period / number of Days in Period.
‘Reference pay’ is either the pay in the last pay period before 19 March 2020, the pay in the last pay period on or before 28 February 2020, the ‘average’ pay in this employment during 2019-20 (see explanation below), or the pay in the equivalent pay period in the previous tax year (if with the same employer) , depending on the method you wish to use.
Calculation of the Employer’s NIC grant per employee
= ( Actual Employer NIC in Period / number of Days in Period ) x number of Furlough Days in Period x (Gross Pay grant / Total pay whilst furloughed in period )
Calculation of the Employer’s claimable pension contribution per employee
Take the lower of 1 and 2 below (with the minimum being zero)
1. (Gross Pay grant – ( Lower Level of Qualifying Earnings x number of Furlough Days in period / Days in period )) x 3%
2. The actual amount of ER pension contribution made in the pay period.
The Lower Level of Qualifying Earnings for 2019-20 is £512/month or £118/per week
The Lower Level of Qualifying Earnings for 2020-21 is £520/month or £120/per week
How the ‘daily average’ for 2019-20 is calculated
Payroll Manager calculates a ‘daily average’, which is the total of all pay for the pay elements you select, divided by 366.
If an employee is furloughed in the 2019-20 tax year then the pay for the period(s) in which they were furloughed and the total number of days in this pay period are discounted from the calculation.
If an employee started their employment during the tax year then the number of days used in the calculation is reduced (from 366) accordingly.
An employee commenced employment of 10th April 2019 and was paid £100 per week for the first 51 weeks of the year. They were furloughed in week 52 and were paid £80 in that week.
The total pay for the year to use in the calculation is 51 x 100 = £5,100 (the £80 is discounted as it was in the furlough period)
The total number of days to use in the calculation is 366 minus 4 (days not employed from start of tax year) minus 7 (days in pay period that employee was furloughed) = 355
So the daily average is £5,100/355 = £14.37