The FCSA seeks government clarification regarding the Coronavirus Job Retention Scheme

The following note was added on 20th April 2020 – The Corona Job Retention Scheme portal has now opened for applications. As things stand, it appears that umbrella employees are eligible for 80% of the National Minimum wage. However, there is a serious lack of information regarding Holiday Pay and the Apprenticeship Levy for umbrella employees and we are urging the government to provide immediate clarification.

In order to obtain quick answers from the government, 5 of the leading UK professional bodies (including the FCSA) have rallied together. They are pressing the government to provide more information about furlough pay for umbrella employees. Please continue to check our blog for more information. As soon as the government provide more useful information, we will relay it to you.

If you are a Churchill Knight Umbrella client and you believe you may be eligible for furloughed leave, please complete the short form here. We would like to thank you for your understanding. Rest assured, we are doing everything we to get answers.

To help support the UK’s workforce, the government has unveiled the Coronavirus Job Retention Scheme. While “the scheme is welcomed by the FCSA”, there is a lot of missing information and there is a genuine worry that agency workers could fall through the cracks.

As things stand, it is possible that agency workers, including umbrella workers, will only be able to claim 80 percent of the National Minimum Wage – rather than traditional employees who can claim up to 80 percent of their salary. However, the FCSA is doing their part to rally contractors and is encouraging them to send a message to their local MP. More information is available below.

Julia Kermode, Chief Executive of FCSA, has said the following regarding the current situation and uncertainly surrounding agency workers:

“Having looked closely at the information we currently have available to us, we are very concerned about how the pay rate of furloughed workers, whose income varies, such as umbrella employees, will be calculated under the Job Retention Scheme, and have requested urgent clarification from government on this matter.”

“Most temporary workers secure their work through a recruitment agency. Once secured, the workers decide whether to be paid through agency payroll, an umbrella employer or through their own limited company, often called a Personal Service Company (PSC), if the worker is “in business”.  Both agency payroll and umbrella employers provide PAYE solutions for their contingent workers with full tax paid on all variable earnings. “

“Umbrella employers guarantee to pay workers at least National Minimum Wage for hours worked even if the agency does not pay the umbrella.  This is a contractual commitment which is intended to give umbrella employees additional stability and certainty.  The balance of funds received from agencies is also paid to the workers and is often referred to as a discretionary commission or bonus (although it is not related to performance but rather to the umbrella having received the funds.).”

“We therefore believe that umbrella employees should be classified as “employees whose pay varies” in the same way as agency workers are categorised.  To classify umbrella employees differently would be unfair as they are also agency workers.  We are very concerned that, in guaranteeing National Minimum Wage and simply referencing the balance of the pay as bonus or commission, it may be argued at a later date that the 80% payment should only be based on National Minimum Wage and that balance of the pay is misconstrued as a performance-related bonus.  Logically agency workers should be treated the same whether they have chosen umbrella or agency payroll as the method of being paid.”

“However, until we have confirmation from the government, then it is impossible for umbrellas to calculate furloughed pay based on an average of all earnings because there is a significant risk that this amount will not be reimbursed by the government.”

“We are actively lobbying on behalf of the circa 625,000 umbrella employees who would be affected by this guidance to ensure that they fairly receive furloughed pay based on their average earnings and not solely on 80% of NMW.”

Contact your local MP

Following the FCSA’s guidance, Churchill Knight Umbrella is also urging all of our clients to send a message to their local MP – as soon as convenient. Don’t worry about writing a time-consuming letter – the FCSA has created a template for you to use. You can download it here or by clicking on the button below.

Why are we accredited by the FCSA?

Churchill Knight has recently become an accredited member of the FCSA. We believe obtaining this prestigious accreditation is the perfect way to showcase our commitment to compliance within the industry. To become a member of the FCSA, Churchill Knight (and our associated companies) have undergone a rigorous audit and assessment process. You can find more information about our FCSA accreditation by clicking here.

We’ll keep you up to date

Churchill Knight will continue to keep you up to date with the latest developments. Please keep visiting our blog and social media profiles.