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FCSA position on latest coronavirus job retention scheme guidance

Job Retention Scheme

We welcome the additional job retention scheme guidance published by the government on 4 April 2020, and it is very positive that umbrella is specifically mentioned – this is due to our extensive lobbying as we needed to ensure that umbrella employers would be able to access the scheme.

However the guidance is contradictory as to whether umbrellas can calculate furlough pay based on an average of all earnings, or just basic pay. Without urgent clarity on this point, umbrellas would be sensible to calculate furlough pay as 80% of basic pay only, i.e. without the commission that most umbrella employees receive.  Any umbrellas calculating furlough pay based on an average of all earnings will be taking a very significant financial risk of not being reimbursed by the government, or needing to repay the government when their furlough pay is audited at a later date.

In addition, there is still no certainty regarding holiday for furloughed workers, and there are differing legal opinions on this point.  If furloughed workers are entitled to accrue holiday, this will be an additional cost (of 12.07% on top of furlough pay) which will need to borne by the umbrella.  Again, without certainty regarding holiday, any umbrella furloughing their workers would be taking a financial risk of needing to pay for holiday at a later date.

It is hugely disappointing that the apprenticeship levy will not be funded as this is essentially a payroll tax, plus that so many questions remain unanswered.  We are continuing our quest for urgent clarity because the financial implications for umbrella employers have not been properly considered.

In short, there is still a lot of work to do if the government genuinely want umbrella employers to be able to furlough their employees.