Hundreds of thousands of agency workers including care workers and supply staff missing out on furlough cash
MORE than 600,000 agency workers, including supply teachers and care workers, could be missing out on emergency income through the government’s furlough scheme due to a loophole in the rules.
The scheme sees the state pay 80 per cent – up to £2,500 a month – of the wages of workers who can’t work due to the coronavirus lockdown.
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The grants cover workers on the PAYE pay roll but doesn’t include wage top ups such as discretionary bonuses, commission or tips.
There are 625,000 agency staff in the UK, including contractors, who are eligible for the scheme because they’re paid through umbrella companies that put them on the PAYE payroll.
This allows them to be paid by multiple employers in one pay cheque and gives them the same statutory rights as full-time workers.
To process the different salaries paid for by various employers, umbrella companies employ these agency staff on minimum wage and then top up their salaries through discretionary commission or discretionary bonuses.
Will commission count towards my furloughed salary?
WHETHER commission counts towards any furloughed payment depends on whether it was written into your contract that your employer had to pay you commission.
If your employer is contractually obliged to pay you commission you can claim it, but if it’s not part of your contract, for example you’re paid ad hoc tips from customers as a waiter, you can’t claim for it.
HMRC says the following scenarios count under furlough:
- regular wages
- non-discretionary overtime
- non-discretionary fees
- non-discretionary commission payments
- piece rate payments – where you’re paid per item manufactured, for example
But you can’t include the following payments made at the discretion of your employer or your client in your furlough wages:
- tips
- discretionary bonuses
- discretionary commission payments
- non-cash payments
- non-monetary benefits, such as benefits in kind eg, a company car, and salary sacrifice schemes eg, pension contributions, that reduce an employees’ taxable pay
But because these types of income are excluded from the furlough scheme, agency staff will be forced to live off 80 per cent of minimum wage – less than £7 an hour – despite typically earning far more.
As a result, many umbrella firms are reluctant to furlough workers for fear of underpaying them – once a member of staff has been put on the scheme on minimum wage it can’t be changed if it turns out they are able to claim for more.
“It’s absolutely unacceptable full wages aren’t taken into consideration when it comes to furloughing agency workers,” Julia Kermode from the trade body Freelancer and Contractor Services Association (FSCA) said.
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“They pay national insurance and income tax at full rate so why aren’t they covered by the scheme?
“And while we wait for clarification from HMRC, these employees aren’t getting paid at all.”
The FSCA and NASUWT, the union for teachers, are together campaigning for the Treasury to change the furlough eligibility to allow these workers, including supply teachers, to receive 80 per cent of their usual salaries.
A spokesperson for the Treasury said: “In our published guidance, it makes clear what agency, freelancers and contract workers are eligible for under the Job Retention Scheme.
“We’ve also set out detailed information on what constitutes as wages as part of employer’s calculations.”
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Thousands of new starters are also still missing out on vital furlough payments due to a loophole in the scheme.
The Treasury extended the scheme to include those who were on the payroll on March 19, 2020 to help new starters – an extra three weeks on the previous February 28, 2020 deadline.
But to qualify, employees now must be on a PAYE Real Time Information (RTI) payroll submission on March 19, and not just on the payroll.