We have created an information hub to support our Orange Genie Accountancy clients, our Umbrella Employees and agencies where the the Covid-19 rules and legislation are explained for recruiters, contractors and the self-employed. Click here to find out more>>
There has been some confusion regarding how the Government’s coronavirus relief package, including the Job Retention Scheme, interacts with guidance to public-sector engagers. This confusion arises mostly because the provisions are remarkably similar. However, there are differences between the CJRS and the public-sector guidance, and where recruiters and contractors are concerned, these could have a profound effect on the outcome.
The Government’s view is that most public-sector workers will either be classed as essential workers, or will be redeployed to essential work, and puplic funding for staff wages will continue, so they don’t envisage many workers being furloughed.
Where contingent workers are not able to work because of Covid19, the Government’s procurement policy notes (PPN) 01/20 and 02/20 advise public-sector bodies to pay 80% of their pay, up to a maximum of £2,500 a month. This is similar to the CJRS, except that payments would go through the usual supply chain, including all agency fees and margins, rather than being claimed back from HMRC.
This would continue for the duration of the contractor’s current assignment. There is no requirement for assignments to be extended where they were due to naturally end. The guidance infers, but does not specifically state, that assignments should be extended if extensions were expected before the Covid19 outbreak.
While the public-sector procurement policy includes 80% of all costs, including agency fees and margins, the CJRS only covers 80% of pay, employer pension contributions and employer’s national insurance. This leaves all other employment costs, including Apprenticeship Levy, to be covered by the recruiter or umbrella company, while leaving them no way of covering their costs. In other words, under the CJRS the employer loses money on each payment, while under the public-sector policy they don’t.
Following the public sector policy would also ensure that the contractor receives 80% of their normal pay, rather than 80% of National Minimum Wage, which is what umbrella employees will receive under the CJRS if current guidance is not amended or clarified.
Where this can be arranged, it’s obviously better for the you, the contractor and their umbrella company if the public-sector policy is followed.
If you have public-sector contractors who cannot continue to work due to Covid-19 their position depends on whether their assignment was ongoing or due to end. For ongoing assignments, the government expects this guidance to be followed.
In the specific case of state-funded schools, separate guidance has been issued, referring decision makers to PPN 02/20, but only where an ongoing assignment exists. Supply teachers who have an ongoing assignment in a state-funded school, or would have if not for Covid19, should be paid according to the public sector guidance.
Where no current assignment exists, or where this assignment has come to its natural end during the lockdown period, workers must look to their recruiter or umbrella company to furlough them under the CJRS.
This policy will be followed by central government departments, and non-departmental bodies, like state-funded schools and NHS trusts are strongly advised to follow it as well. Strong advice does not amount to an instruction, though. Should these bodies decide not to follow the policy, government does not intend to insist and again contractors will have to rely on the CJRS, and must hope to be furloughed by their umbrella company or recruiter.
As we said earlier, many public-sector workers are classed as essential, and will not be furloughed. However, where they fall ill or are forced to self-isolate due to public-health guidelines, they will still be unable to work. In these circumstances SSP is likely to be more of an issue than it usually is, as recruiters and umbrella companies see more claims for SSP while their income is reduced.
Small businesses will be eligible to claim the first 2 weeks of SSP back from the Government. However, the scheme requires that you had fewer than 250 employees on or before 28th of February 2020, and as it stands this includes temporary workers, meaning even small recruiters are unlikely to qualify. REC and FCSA are lobbying for this to be changed.
If you have any questions or if we can help in any way, please call our expert team on 01296 468 483 or email info@orangegenie.com.
