Major change to variable paid employees’ CJRS grant claims calculations from 1 May 2021

23 April 2021

This change applies to all variable paid employees furloughed from 1 May 2021. The change will apply whether they have previously been furloughed or not. It will apply where, during the 2019/20 tax year, they have had any periods of Statutory Sick Pay (SSP), or any family related leave, and for that period of leave they received less than their full pay.

Where this is the case, unless employers use the correct CJRS grant claim calculation methodology from 1 May 2021 and, where applicable, recalculate their variable pay grant claims for those who have taken any of these types of leave during the tax year 19/20, they may underpay a furloughed employee. This underpayment would invalidate the whole grant claim for an employee from 1 May 2021 where they do not receive 80 per cent of what they are entitled to receive.   

HMRC have said that, for CJRS claim periods up to and including 30 April 2021, employers can continue to count in the reference period the wages and calendar days for which the employee was not receiving normal pay due to being:

  • on sick leave and receiving only SSP; 
  • on any family related leave and receiving only statutory pay; and
  • in receipt of less than full pay after SSP or a family-related statutory payment has expired (referred to as ‘reduced rate leave’ in the guidance and legislation) 

However, the change relates to the claim periods from 1 May 2021 onwards. Employers MUST discount the days and pay related to periods of sick, family-related leave or reduced-rate leave during the reference period for variable paid employees where they were only paid statutory payments (or where unpaid) during such leave and not full pay.  

HMRC have provided examples 3.14 and 3.17 here.

The exception to this change is that, if an employee was on one of these types of leave for the entire reference period which is to be used to calculate their average wages for CJRS reference pay purposes, then employers should continue to include the days and wages related to that leave when calculating furlough claims for claim periods from 1 May 2021.

Statutory leave and fixed rate employees - no change

For those employees who are fixed rate employees, either in Group 1, 2 or 3 (which is dependent on the relevant reference day for reference pay purposes), who have in their reference pay period any hours on annual leave, sick leave or statutory family related leave you do not make any adjustment to their usual hours. For example, for someone who works 40 hours a week and who has 10 hours of unpaid leave, their usual hours remain at 40 hours per week. See example 2.5 here.

CJRS new eligibility from May 2021

If employers have employees who have previously been ineligible for the CJRS, as they were not on their payroll on 30 October 2020, they may be eligible for periods from 1 May 2021 onwards. 

From May 2021, employers will be able to claim for eligible employees who were on their PAYE payroll on 2 March 2021. This means they must have made a PAYE Real Time Information (RTI) submission between 20 March 2020 and 2 March 2021, notifying HMRC of earnings for that employee.

Employers and their employees do not need to have benefitted from the scheme before to make a claim, as long as they meet the eligibility criteria.

The following reference day for CJRS reference pay applies:

  • Group 1: those on an FPS by 19.3.20: the last pay period before this date 
  • Group 2: those (not in Group 1) on an FPS between 20.3.20 and 30.10.20: the last pay period before 30.10.20
  • Group 3: those (in neither Group 1 nor 2) on an FPS between 31.10.20 and 2.3.21: the last pay period before 2.3.21 

For further information on how to calculate the reference pay for each of these groups see our article ‘Job retention scheme’ and the HMRC website.


With seven Treasury Directions and more than 200 changes to the HMRC guidance, we recommend employers check the guidance before making each claim to make sure there have been no changes.

For those who have not previously reviewed earlier claims, we suggest they consider doing so now before auditors, tax advisers or HMRC require information, both to make sure the grant claimed is correct and whether changes are needed to the accounts, tax return or repayments to HMRC with interest and penalties may apply.

If you need any assistance please contact Susan Ball, Carolyn Brown or Steve Sweetlove