The Government has advised that furlough payments can be made to umbrella company employees. Please note that there is specific qualifying criteria which you will need to meet to make a furlough application. If you are a Brookson customer and require further information, please get in touch with our umbrella team.
Guidance has been updated over the weekend for the Coronavirus Job Retention Scheme in relation to umbrella company employees. The Government have now made it clear that furlough payments can be made to umbrella company employees. Now this has been clarified umbrella companies should ensure this process can set be up as quickly as possible.
The guidance states that payments for umbrella employees will be based on the National Minimum Wage element of your salary only. The CJRS will meet these costs together with the associated Employers National Insurance and minimum auto-enrolment employer pension contributions on the reduced salary. The calculation is based on:
- The same month’s NMW earnings from the previous year (last pay period up to 19th March 2019) or
- Average monthly NMW earnings for the 2019-2020 tax year.
If you have been employed for less than 12 months, the calculation is based on the average monthly NMW earnings since you started work until the date you are furloughed. The furlough pay is based on 80% of the calculated figure, pro-rated on a monthly or annual basis respectively from the date the furlough leave commenced.
The guidance stipulates that you will need to have been on the umbrella company’s payroll and received a payment from us on or before 19th March 2020 (formerly 28th February 2020 – guidance updated 15th April 2020) and had an existing assignment terminated early due to COVID-19 to be eligible.
You will need evidence from your agency and/or end client to confirm that you are unable to work in your current contract due to COVID-19. If you think you are eligible and want us to consider making a payment to you under the scheme, you should contact us so that we can assess your eligibility.
A specific requirement of the CJRS is that we must provide a furlough letter to you advising that you are on furlough leave. This sets out the furlough terms, such as the date from which you will be on furlough and your pay entitlement. It is a variation on the employee’s contract of employment, so we ask that you sign the furlough agreement and return it to us, before payment can be made. This is our evidence, in the event of a HMRC audit, that we are complying with scheme requirements.
Within the furlough agreement, you must confirm that you will not undertake any work for the umbrella company whilst furloughed- this would automatically invalidate your entitlement to pay and our commensurate claim for grant funding for you.