Furlough Scheme: Basic rules November 2020-January 2021

The Coronavirus Job Retention Scheme (furlough scheme) has now been extended until the end of March 2021

The scheme means employees will receive 80% of their normal pay (up to a maximum of £2,500 per month) for the hours they cannot work and the employer can claim the full 80% from the government.

You cannot claim for the employer’s national insurance contributions (NICs) or the employer’s pension contributions that you have to pay on behalf of your furloughed employees. This covers the claim periods running to 31 January 2021.

The government will review the policy in January and decide what level of support will be available for February and March.

Who Qualifies

The extension covers all employees on the payroll who have been paid and notified to HM Revenue & Customs (HMRC) under RTI by 30 October. The employee does not have to have been previously furloughed and you do not need to have used the scheme before. The scheme is still flexible so the employee can still do some work if that option is available. All worked hours, of course, must be paid in full.

The income the calculations are based on

If the employee was on the payroll and notified to HMRC under RTI by 19 March 2020, then their furlough income is still calculated by using the previous rules (regardless of whether they were previously furloughed or not):

  • Normal monthly income to 19 March (normally their last pay received in February 2020)
  • If not paid a set monthly amount, then calculated on the higher of their average monthly pay for the year, or the pay they received for the same month of the previous year.

If the employee has only been on the payroll since 20 March and notified to HMRC by 30 October, the income is calculated on the following:

  • Normal monthly income from 6 April (normally their last pay received in October 2020 if filed by 30 October)
  • If not paid a set monthly amount, then calculated on the higher of their average monthly pay for the year from 6 April, or from the date they were employed from.

Actual hours worked and furloughed total normal working hours for a month

When an employee works for some of the time during a claim period, you will notify HMRC as part of your grant claim the hours the employee normally works and the actual hours they did work. HMRC’s calculations are based on normal working patterns spread over the number of calendar days in a month and so the total number of hours may look different to what an actual full month may look like.

Worked hours are calculated on the actual hours worked and are not calculated using the furlough hours per day calculation. The difference between the furloughed hours using HMRC’s calculation method and the actual hours worked is what you can claim for your employee.


Please also note that your employees can take holiday during a furlough period. If they do, they must be paid in full for this time taken, though you can still claim the furlough pay. If you do not have an arrangement for the holiday entitlement covering the Bank Holidays to be taken at a later time in the year, these days must be paid in full as well.

You need to be aware that the amount of pay you receive for a furloughed day is different to 80% of a normal working day rate. This means you need to know both amounts before you can determine the additional pay you must make to an employee for each day’s holiday taken.

Filing Deadline

The filing deadline is now very strict. A claim for the furlough grant must be made by 14th of the month following the month you wish to claim for. So, for example, a claim for the November payroll must be made by 14 December.

HMRC have also declared that from December, all companies claiming the furlough grant will be publicly named.

Further information

For full information on how the scheme is to be operated and with details of the calculations to be made and examples, please go to Gov.uk website.

Last updated: 17.11.2020

Whilst the information in this document is correct; you should always obtain individual advice from a qualified accountant.