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We finally have the furlough pay clarification we need
Paul Malley | Managing Director
Monday 4th May, 2020
When the Government introduced the Coronavirus Job Retention Scheme (CJRS) the country breathed a sigh of relief. However it was short lived for our umbrella employees because once we had all digested the guidance, it was clear that the Government hadn’t fully considered the way in which an umbrella employee works, and more specifically how the definition of regular salary should specifically be interpreted for such an employee.
Given this uncertainty we had to reluctantly advise that we would be calculating furlough payments based on an average of basic pay (NMW) only. This wasn’t an easy decision to make as we knew this would unfortunately cause a lot of concern and frustration for our umbrella employees. However as a responsible business we had to make such an important decision based on the advice available to us.
Furlough pay will now include commission too
As you know we have been working hard as a sector to get clarity on this point. Every umbrella is different and has individual complexities and so it has also been important that we take our own advice on this subject.
We are pleased to say that, following further discussions with HMRC and our advisors, we are now comfortable in also including commission in the furlough pay calculation for our umbrella employees. This will be the basis of the calculation for the full furlough period for any eligible umbrella employee.
This means that umbrella employees who have already completed the sign-up process will need to sign a new furlough letter.
Furlough pay remains a complex issue for many in our sector
We do not believe there was any Government intention to treat umbrella workers differently than other workers. This is far from straight forward as there are many challenging issues at play, which can and do vary for individual umbrella businesses. Just because we are now comfortable with this approach does not mean that all umbrella companies are able to do so without significant financial risk.
We will continue to work as a sector in seeking the necessary confirmations required to ensure all umbrella employees are treated fairly.
If you are an umbrella contractor that would like further information regarding our furlough process, please contact email@example.com.
Related article - COVID-19: Umbrella employee guidance
In this article we provide guidance on the Coronavirus Job Retention Scheme (CJRS) including who is eligible for furlough pay and what the furlough pay calculation includes.