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Job Retention Scheme and temporary workers: the questions that you are asking
We have received many questions over the last few weeks as to how the Job Retention Scheme applies if you work through an agency, an umbrella company or your own limited company, inside and outside the public sector.
The government guidance can be found on GOV.UK. Although it has been updated several times since it was first published, and it specifically mentions agency workers, umbrella company workers and those that work through their own limited companies, there are still many unanswered questions about how it will all work in practice (and this remains the case, even though the detailed scheme rules have now also been settled).
Here we look at some of the main types of queries we have been receiving – and – as at 17 April 2020 – give you a flavour of some of the answers we have been giving.
The position and government guidance is evolving. Check back to our website for any updates to the information below.
I'm on the books of an agency but haven’t worked since December – am I covered by the Job Retention Scheme?
The guidance says the Job Retention Scheme can apply as long as you were on your employer's payroll as at 19 March 2020 (originally 28 February 2020). See our recent news item Extended furlough date of 19 March: but who exactly benefits? for information on exactly what this means.
If you worked for an agency in December but have not specifically told them that you don't want them to find you any more assignments (and thus, have not received your P45), it is likely you are still on their payroll.
It is currently not clear whether the intention is that temporary workers can only benefit from the Job Retention Scheme if they were in an assignment that has been curtailed or were booked in for an assignment that has been cancelled because of the coronavirus, or whether it will apply to people who were simply on the books as at 19 March 2020.
We assume it is the latter because of the Cabinet Office guidance (mentioned below) that signposts certain public sector contingent workers outside of a live assignment to the Job Retention Scheme, however this is not yet confirmed.
I've just had my agency assignment cut short, but my agency does not want to furlough me
Firstly, it is worth considering whether you really want to be furloughed – you may not want to be furloughed, for example, if there is a chance that you could get another assignment that pays more than being furloughed (as being furloughed means that you cannot undertake any further work for that agency).
If you do want to be furloughed, it is up to your agency whether to furlough you or not. We understand that there is some pressure on employers to use furloughing in a wide range of circumstances on the basis that it is cost neutral to them, however it is important to note that there is no obligation on employers to furlough workers.
One big problem for agencies (and umbrella companies who are sometimes used to pay agency workers – see below) is that during the period of furlough, there will be overheads for them in administering the scheme and keeping you on, yet there is no money built in to the Job Retention Scheme grant to cover all their ongoing costs and obligations. You should remember that unlike most regular employers, an agency or umbrella company has no other income apart from the gross fee income paid to them by end clients when workers are out on assignment.
Some agencies and umbrella companies may have concerns as to whether they will have sufficient cash flow to meet their costs and obligations and are waiting on further information from government, for example, about whether holiday pay will continue to accrue on furlough pay, before deciding whether to furlough workers on their books.
You may be interested to know that a group of agency/umbrella representatives have recently asked the government for clarity around the issue of the continual accrual of holiday pay during the period of furlough (as well as the umbrella company pay structuring point mentioned below).
I am an agency truck driver – what coronavirus income support scheme do I qualify for?
If you are an agency worker being paid under PAYE (including if you are paid through an umbrella company) and are furloughed, you may be entitled to support with your income during the coronavirus crisis under the Job Retention Scheme.
If, unusually, you are an agency worker and are not paid under PAYE because you are not under any supervision, direction or control, then we assume you have been declaring your income as ‘self-employment’ income in a tax return each year, meaning you might qualify for the Self-employment Income Support Scheme if all the other conditions are met.
If you work through your own limited company, please see our news article I'm a director for my own limited company: what support is there for me?
Umbrella company workers
I work through an umbrella company – is it them, the agency or the end client that furloughs me?
As an umbrella company acts as the employer of agency workers as explained in our factsheet on how umbrella companies work, it would be for the umbrella company to ‘furlough’ the worker, rather than the agency or end client.
However, if an end client has terminated a temporary worker's assignment because coronavirus has impacted on their business (and as this might be a situation where an umbrella company would ‘furlough’ you), the agency/umbrella company may need to get in touch with the end client to confirm that the assignment has ended.
It may be the case that your umbrella company have asked you to work through your own limited company – in this case, the umbrella company is not your employer and cannot furlough you (although it may act as an employer to other workers, so can furlough them), and you should check the information in the limited company worker section below.
I receive a minimum wage salary topped up by a bonus each pay day – what will be counted as income?
Under the Job Retention Scheme, HMRC will provide a grant to employers of 80% of furloughed employees’ wage cost up to a maximum of £2,500 per calendar month per employee – discretionary fees, commission and bonuses are not included for the purposes of calculating the individual’s pay.
Umbrella company workers tend to be paid a minimum wage base amount, then have it topped up by a 'discretionary' bonus. Pay is structured this way to help ensure that workers are paid at least National Minimum Wage (NMW) even where funds are not paid to the umbrella company from the agency.
Although the bonuses umbrellas pay are called discretionary bonuses, an argument could perhaps be made that actually they aren’t all that discretionary in their nature, rather they are paid as and when the umbrella receives the funds from the agency. It is unclear as yet whether HMRC intend to interpret the scheme rules as meaning that umbrella company workers will only be eligible for 80% of NMW or an average of all earnings (up to the cap).
I am treated as self-employed by my umbrella company but have PAYE deducted – what coronavirus income support scheme do I qualify for?
This sounds like the elective deductions model where people are treated as self-employed but ‘opt’ to have PAYE deducted (developed after the 2014 onshore intermediaries legislation stopped the false self-employment of agency workers).
Under this model, you are treated as self-employed, meaning that you are not required to be paid the minimum wage, or be given paid annual leave, etc. but PAYE is operated as is required under the law (meaning that as far as HMRC are concerned, everything appears to be in order).
At the end of the tax year, workers are told they should file a tax return with self-employment pages (and insert self-employed expenses), offsetting the PAYE deducted against the bill generated.
In such cases, there may well be tax returns with self-employed pages to support a Self-employment Income Support Scheme grant. But also payroll records to support a grant claim under the Job Retention Scheme by the employer (which may or may not then be passed to the workers).
This potential for a 'double dip' scenario is on HMRC's radar. If you receive an invitation to apply for the Self-employment Income Support Scheme from HMRC (based on your tax return submissions), but you have already received funds under the Job Retention Scheme (or suspect they have been applied for by your umbrella company) then you should seek clarification on how to proceed from HMRC.
I am a director of my own limited company: what support is there for me?
See our recent news article for a round-up of the position for limited company workers.
By way of an update, to the question What if I pay 'extra' tax because I work in the public sector or am inside IR35?, HMRC's guidance update from 9 April suggests that for those that work in the public sector, it would be possible for a Job Retention Scheme grant (of 80% of the monthly contract value, up to a maximum of £2,500) to be applied for by the 'fee payer' – based on the amount run through their payroll as deemed earnings of the director.
As this would be passed on to the limited company by the fee payer, it goes without saying that it would not then be appropriate for the director to make a Job Retention Scheme grant claim based on that same money, to the extent it was run through their own limited company payroll.
I don't do any of my own limited company admin so I don't know how to furlough myself or claim the grant – help!
People can be asked to work through their own limited company as a condition of getting work, not because it is a considered decision they have taken personally. In these situations, often the limited company is set up for you and run for you (with limited company 'accountancy services' then arranged by the entity that has persuaded you down this route in the first place).
Many of these accountants will not want to, or be authorised to, help with Job Retention Scheme grant applications. You will need to discuss your requirements and the services they might be able to provide you with, with them.
In terms of doing things yourself, although there is lots of information on GOV.UK and ACAS to help businesses and employers with the Job Retention Scheme, in many ways, this assumes a basic level of background knowledge and administrative understanding, which you may not have if everything has been done for you. So, even if your limited company accountant cannot assist with applying for the grant, you will need to make sure you get the all information you need from them in order to be able to make the application yourself. Look out for a forthcoming article in which we explain the grant application process and requirements in more detail.
If your adviser/accountant belongs to a professional body, they should be happy to answer any questions you have and help you work out what you need to do in terms of officially furloughing yourself, calculating the amount of the grant, applying for the grant, accounting for the grant at limited company level and processing the grant through the payroll, although they may charge you a fee for their advice.
Failing all else, HMRC may be able to provide you with the basic information that you need to make the application, for example, the references you need and a record of your recent salary payments (or you may be able to obtain this from your Personal Tax Account).
I am a supply teacher and have had my assignment cancelled but my agency doesn’t want to furlough me
Some agencies/umbrellas may be hesitant to furlough workers given all the overheads there will be in administering the scheme and because there is no money built in to the Job Retention Scheme grant to cover their ongoing costs and obligations.
If you belong to a union, may we suggest that you raise your query with them, as it is unlikely you will be the only one in this situation and it is likely to something they will be keeping a close eye on.
Note, that aside from the JRS, some guidance has been issued by the Cabinet Office which may benefit agency workers (and other types of temporary workers) working in certain areas of the public sector.
This basically says that where agency workers were in a live assignment that was curtailed because of the coronavirus, they should continue to be paid 80% of their salary (to a maximum of £2,500 per month) for the remainder of their assignment by the public body (with all agency accruals/margins remaining payable on top). This is separate to the Job Retention Scheme.
The guidance is specifically for those working directly for central government departments (including Executive Agencies and Non- Departmental Bodies), for example, the Department of Transport.
Other areas of the wider public sector (e.g. schools) are encouraged to follow the guidance, but it is unclear whether they will do so, particularly where they are devolved from central government and consider their own financial position precarious.
Contact: Meredith McCammond (click here to Contact Us)