Umbrella Companies and furlough payments


Phil Snowball

On 26 March 2020, the Chancellor, Rishi Sunak unveiled details of a Job Retention Scheme to help all UK employers retain their employees whose role has been adversely affected by coronavirus for at least 3 months starting 1 March 2020. 

However, locums who have been furloughed by their Umbrella Companies have been told they will only receive furlough payments based on the National Minimum Wage. 

I will try to explain why this is happening and what you can do to try and get this changed.

Umbrella employers guarantee to pay workers at least National Minimum Wage for hours worked even if the agency does not pay the umbrella.  This is a contractual commitment which is intended to give umbrella employees additional stability and certainty.  The balance of funds received from agencies is also paid to the workers and is often referred to as a discretionary commission or bonus (although it is not related to performance but rather to the umbrella having received the funds.)

The government has made it clear that furlough payments must not include discretionary commission or bonus which means that the umbrella company is unable to claim more than the NMW.

The Freelancer & Contractor Services Association (FCSA) is lobbying the government to try and get this decision changed and is urging locums to write to their local MP to make them aware of this situation and to represent their concerns to the Treasury.

To help you, they have created a letter template for you to send to your local MP, click on the link below to download. To find the name and contact details of your local MP, click here

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