Currently there is only guidance on how to work out an employee’s usual hours for JSS Open, further guidance at the end of October will set out how to work out usual hours for JSS Closed and also provide more detail for JSS Open.
There are different calculations for working out an employee’s usual hours - fixed or variable. There are worked examples for both in HMRC’s policy paper.
Employees who work fixed hours:
For employees contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work, usual hours are calculated based upon the greater of:
- the hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020
- the hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020, this may be the same number of hours calculated under the Coronavirus Job Retention scheme (NB. if employees moved to part time working, this may be varied, full details will be included in forthcoming Guidance)
This should include hours paid as annual leave and statutory leave.
Employees who work variable hours:
The variable hours calculation applies if either:
- the employee is not contracted to a fixed number of hours
- the employee’s pay depends on the number of hours they work
For employees whose number of hours varies and/or whose pay depends on the number of hours they work, the number of usual hours is calculated based on the higher of:
- the number of hours worked in the same calendar period in the tax year 2019 to 2020
- the average number of hours worked in the tax year 2019 to 2020
- the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020
This should include hours paid as annual leave and statutory leave.
The calculation of usual hours is not and cannot be altered if the employee is expecting to work more or fewer hours than this in the future.
For employees who are part of a flexible work time arrangement, employers should:
- not count as hours worked any hours that the employee worked but was not paid for because they accrued paid time off which they could take later
- count as hours worked any hours that the employee took as paid time off (‘flexi-leave’), which they had accrued by working additional hours at some other time
For employees who are paid per task or per piece of work done whose hours cannot be calculated in this way, hours can be estimated based on the number of ‘pieces’ produced and the average rate of work per hour, as per National Minimum Wage rules.