In a bid to seek definitive clarification from the government regarding furlough pay for agency workers (and those using umbrella companies), five of the UK’s leading professional bodies have come together. APSCo, FCSA, Professional Passport, REC and TEAM have all joined forces and have collectively written to the government asking for vital information that will impact over 1 million agency workers and umbrella company employees.
The government is yet to answer some critical questions
The two main issues that require immediate answers are:
- If an agency worker is furloughed, will they be able to accrue holiday while they are not working? If holiday is to be accrued, recruitment agencies and umbrella companies will not be able to offer a high level of support to protect temporary workers.
- How is an umbrella employee’s furlough pay calculated? Is it based on the average of all their earnings, or will it be based on a basic rate of pay (the National Minimum Wage)? If umbrella employees have their furlough pay based on the National Minimum Wage, this would see hundreds of thousands of people suffer financially. The FCSA does not believe this is the “government’s intention as it will result in two workers doing the same job and paying the same tax receiving very different levels of furlough pay.”
Without the immediate clarification of the questions above, organisations who engage with temporary workers (including umbrella companies) are putting themselves at risk.
Churchill Knight Umbrella has proactively put a furlough pay system in place, and we have contacted all of our clients about the possibility of being furloughed. However, until we receive more information from the government, we are not able to distribute any furlough pay because any incorrect payments could put our financial future in jeopardy.
Ciaran Woodcock, Head of Business Development and Marketing at Churchill Knight Umbrella, has shared his thoughts on the furlough pay situation. There are also some additional quotes from a representative of the leading professional bodies who have all teamed up.
Ciaran Woodcock (Head of Business Development & Marketing at Churchill Knight Umbrella)
“Churchill Knight Umbrella is delighted to see the UK’s leading professional bodies team up and actively challenge the government for vital missing information. I believe that all of our clients should be entitled to furlough pay based on their entire earnings because they are paying the correct tax and National Insurance Contributions to HMRC. It would be unfair if honest contractors were to lose out.”
Julia Kermode (Chief Executive of the FCSA)
“The issues facing our respective members are very similar; they are keen to support workers but are unable to do so without clarity from the government, therefore, working together is the best approach to get the assurance our members need. We don’t believe that the government is deliberately putting barriers up but at the same time there are very significant risks to all of our respective members if they misinterpret the financial calculations of furloughing workers.
“Given that our members all operate large scale payrolls, even a small error could be very significant for those businesses, equating easily to several million pounds. That is why we have sought to work with the government to bring clarity, urgently and ultimately to enable workers to be supported at this difficult time.”
Neil Carberry (Chief Executive of REC)
“Employment businesses welcomed the government’s furlough scheme and thousands of temporary agency workers could benefit from it. But the rules must respect normal practice – temporary workers should accrue holiday when they are working and not when they aren’t. The rules read in this way, but without clarification many businesses will not be able to afford to furlough temps. For many agencies, the holiday wage bill alone for their temps would be prohibitive.
“We and other signatories of this letter seek urgent clarity on these issues so that the labour market can be positioned to bounce back quickly with the help of our industry when the time comes.”
Crawford Temple (Managing Director of Professional Passport)
“We never saw the originally proposed CJRS arrangements as an attack on umbrella providers. We believed that in designing the arrangements in such a short time scale nuances were overlooked. We still have confidence that once these inequities are fully understood they will be addressed. The government, as a result of these unprecedented times, has had to effectively rewrite the tax system in a matter of days and this was always going to have issues. What is clear is that there seems to be a genuine under lying principle to help workers during these difficult times.
“Collectively there are the same issues across the whole sector, as highlighted by this letter, and the collective voice needs to be heard.”
Ann Swain (Chief Executive of APSCo)
“Our conversations with politicians over the last few weeks have shown that the government is listening, and we have been encouraged by the swift action taken to protect businesses and jobs. We hope this clarification will also be swift.”
Churchill Knight Umbrella will continue to keep you up to date
Churchill Knight Umbrella will continue to keep you up to date with the latest developments surrounding furlough pay and legislation that will impact your candidates. Please keep visiting our Recruiters Blog. If you have any questions, please contact your Churchill Knight Account Manager by email, or send a message to firstname.lastname@example.org.