On Saturday 4th April, the government released more information on the Coronavirus Job Retention Scheme (CJRS). Interestingly, the updated guidance specifically references “umbrella companies”. While this is positive, there are still plenty of unanswered questions and the FCSA has described the new information as “contradictory”.
A step in the right direction
In the latest guidance, the government as confirmed that “where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.”
The above has been welcomed by professional bodies throughout the UK, including the FCSA. However, despite being a positive step in the right direction, the FCSA has described the update as “contradictory”. It is encouraging that umbrella companies have been mentioned in the updated Coronavirus Job Retention Scheme guidance, but it is still not clear how umbrella companies are expected to process furlough pay.
Further clarification is needed urgently
The FCSA has confirmed that at this precise moment, it is unclear “as to whether umbrellas can calculate furlough pay based on an average of all earnings, or just basic pay.” If an umbrella company was to pay their clients based on 80% of their salary, they’re taking a substantial risk and could find themselves in financial difficulties in the near future.
Additionally, there is still a lack of information regarding holiday for workers who are furloughed. If a furloughed worker is allowed to continue to accrue holiday allowance while being furloughed, this will equate to an additional cost of 12.07% “which will need to be borne by the umbrella”.
We’re putting procedures in place
Umbrella Company UK is actively putting furlough procedures in place so that we can assist our clients as soon as more information is made available. However, until we receive clarification on whether we can calculate furlough pay on the average of all earnings or just basic pay, we must only offer furlough on basic pay.
We will continue to keep you up to date
As soon as more information is made available, we will share it with our clients. Please keep checking your inboxes and visiting our blog.