To help support the UK’s workforce, the government has unveiled the Coronavirus Job Retention Scheme. While the FCSA has welcomed this, there are still plenty of unanswered questions, including how it will be rolled out and who exactly can claim.
Presently, it appears that agency workers, including your umbrella candidates, will not be able to claim 80 percent of their normal salary – like permanent employees. Instead, it looks as if they will only be able to claim 80 percent of the National Minimum Wage.
Churchill Knight is accredited by the FCSA
Churchill Knight (and our associated companies) recently achieved FCSA accreditation and we believe there is no better way of showcasing our commitment to compliance within the industry. We are delighted to see that the FCSA is doing everything they can to seek clarification from the government regarding the confusion arising from the Coronavirus Job Retention Scheme. We also fully support their views on supporting agency workers and we sincerely hope that our umbrella clients are protected as part of the scheme.
The FCSA are challenging the government
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.”
What advise should you pass on to your candidates?
The FCSA is urging your umbrella candidates to contact their local MP, and have created a template letter that can be downloaded here.
Churchill Knight Umbrella is awaiting further information from the FCSA, but we are doing everything we can to ensure our clients are kept up to date with the latest developments.
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.