In an unprecedented move, five of the UK’s leading professional bodies – APSCo, FCSA, Professional Passport, REC and TEAM – have joined forces to write to the government to seek urgent and absolute clarity on the calculation of pay for furloughed agency and umbrella employees under the Coronavirus Job Retention Scheme (CJRS).

Without answers from the government on these pertinent questions, over 1 million UK agency and umbrella employed workers livelihoods are at serious risk.

Despite repeated attempts by these professional bodies and their members lobbying the Treasury to get definitive answers, the government still has not provided full clarity on the following matters:

1. Does normal practice apply whereby agency workers (whether working through an agency or via an umbrella company) do not accrue holiday whilst on furlough leave? Accruing holiday will significantly reduce the ability of agencies and umbrella companies to protect temps at this time.
2. The FCSA and Professional Passport members need to understand whether an umbrella employee’s furlough pay calculated on an average of all earnings or just basic pay (National Minimum Wage)? Umbrella workers are at risk of receiving furlough pay calculated only on NMW, which we do not believe 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. Therefore we would like clarification that umbrellas can calculate furlough pay for their workers according to the average taxable pay, in the same way as all other agency workers will have their furlough pay calculated. 

Without certainty on these two business-critical matters, companies who operate umbrellas and employment businesses will be exposing themselves to considerable financial risk which could potentially lead to business failure.

Whilst the professional bodies welcome the additional guidance recently published by government in relation to this scheme, the wording with regards to how umbrella employers are required to calculate payments for these employees still remains vague and open to misinterpretation. It is therefore vital that this matter is clarified once and for all so that the umbrella employees can be paid quickly, fairly and correctly, and that the future of these businesses who employ them are protected from business failure.

The CEO’s comment on their collective action to protect the interests of their respective members in this vital sector of the UK’s economy:

Julia Kermode, Chief Executive of the FCSA said:

“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, REC Chief Executive said:

“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, MD of Professional Passport said:

“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 said:

“Our conversations with politicians over the last few weeks – and particularly my recent conversations with the Prime Minister’s Special Advisor – 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.”

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