Why Churchill Knight Umbrella is currently unable to offer furloughed leave

As things stand, Churchill Knight Umbrella is still unable to offer furloughed leave to our umbrella clients. At such an unprecedented time, we understand that our clients need financial support more than ever before. This is why we are urging the government to provide much-needed clarification on how umbrella companies process Holiday Pay and the Apprenticeship Levy.

The government introduced the Coronavirus Job Retention Scheme (CJRS) to support workers throughout the UK. There is no reason at all why they would not want to support umbrella company employees. After all, umbrella employees receive PAYE, meaning they have paid the right amount of tax and National Insurance Contributions (NICs) – just like those in permanent roles.

Continuity of employment

It is true – employment contracts used by umbrella companies appear to be complicated. But in reality, they’re pretty straightforward. Every worker is paid the rate they have agreed with their agency or client. Their earnings are shown on their payslip as a combination of the National Minimum Wage (NMW), and then the rest is declared as a discretionary bonus. This is done to be able to offer continuity of employment.

Paying umbrella users in this way allows umbrella companies to keep their clients on the payroll system while they go and earn different rates on different short-term assignments. Continuity of employment is a significant and valuable benefit to using an umbrella company because it entitles workers to qualify for Employee Benefits – as they quickly build up a long-term employment history with the same employer (the umbrella).

What is the confusion surrounding Holiday Pay and the Apprenticeship Levy?

Currently, furloughed umbrella employees would be entitled to 80% of the NMW. This alone is not satisfactory because it fails to take into account the actual earnings of an umbrella worker. However, at this time, we understand anything is better than nothing. To add further confusion, every employer (including umbrella companies) offering furloughed leave to their workers is required to pay accrued Holiday Pay and the Apprenticeship Levy.

As an umbrella company, our clients do not work for us and we only take care of their payroll. As a result, the only income we generate is from the margin that we charge for our service. Therefore, if the government fails to reassure umbrella companies that they will be reimbursed for the accrued Holiday Pay and the Apprenticeship Levy, we are not prepared to take a gamble that could see our business become insolvent within a couple of weeks. We would stand to lose hundreds of thousands of pounds in only in a matter of days, and every umbrella company in the UK is in the same predicament.

What is Churchill Knight Umbrella doing at the moment?

Five of the UK’s leading professional bodies have teamed up to confront the government about their lack of guidance. We fully support this movement and are in regular contact with the FCSA for updates.

Julia Kermode, Chief Executive at the FCSA was on BBC Sounds Money Box recently – discussing the urgent need for the government to take action in regards to the umbrella employees currently “left in limbo”.

Churchill Knight Umbrella recently became accredited by the FCSA, and we are delighted they are doing everything they can to protect freelancers, contractors and compliant umbrella companies. The CJRS was set up to provide a safety net for UK workers, and the FSCA will not stop their efforts until clarification is made available.

We are awaiting further news but the campaign seeking answers from the government is undoubtedly picking up steam.

What can umbrella employees do?

Churchill Knight Umbrella is urging all of our clients to get in contact with their local MP. The FCSA has already created a template that you can use for your letter. It is vital your MP understands the current situation. Most importantly, we want MP’s to understand that all we need is clarification – it shouldn’t be this difficult.

We want our clients to benefit from the Coronavirus Job Retention Scheme

Churchill Knight Umbrella wants to be able to offer furloughed leave, and we want our clients to get the financial support they need. We also appreciate that the current situation is causing copious amounts of stress and anxiety.

Ciaran Woodcock, Head of Field Sales and Marketing, has said:

“Churchill Knight Umbrella wants to be able to furlough our clients because we believe they are fully entitled to furlough pay. However, until the government provides clarification, we cannot put the entire future of our business on the line. Not only could Churchill Knight Umbrella become insolvent, but our hard-working team could lose their jobs.

We are doing everything we can to seek the clarification we need. I know it’s not easy for our clients at the moment, but please understand our situation. The whole team is hopeful that the government will do the right thing and show solidarity to the UK’s temporary workforce. After all, the current situation is impacting over 600,000 workers and waiting for clarification like this is unacceptable”.

“As our clients will already be aware, we have started to put furlough procedures in place. If you are a Churchill Knight Umbrella client and you haven’t already completed our Furlough Declaration Form, please do so now by clicking here. I must make it clear – completing this form does not offer any guarantees. However, we have created this form in anticipation of the government making the right decisions regarding furlough leave for umbrella employees. If you complete it, we will have all of the information we need to process your furloughed leave and furlough pay quickly – upon a positive update from the government.”

If you are a Churchill Knight Umbrella client who is desperately trying to seek answers regarding furloughed leave, we ask that you remain patient and keep checking your emails and our blog. As soon as more information is made available, it will be shared with you.