Furloughed agency staff to receive 80% of full pay after HMRC closes loophole
HUNDREDS of thousands of agency staff, including supply teachers and carers, are to benefit from new Government guidance that lets them receive 80 per cent of their full salary if they've been furloughed.
A loophole in the rules meant that 625,000 UK workers, such as contractors, could only claim help on a small portion of their lost earnings, leaving them with less than minimum pay to live on.
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It's to do with the complicated way agency employees are paid through the PAYE payroll with umbrella companies.
These firms allow staff 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 agency staff on minimum wage and then top up their salaries through discretionary commission or discretionary bonuses.
The Government's Coronavirus Job Retention Scheme sees the state cover 80 per cent - up to £2,500 a month - of the wages of staff who can't work due to the coronavirus lockdown.
What is furlough?
THE aim of the government’s job retention scheme is to save one million workers from becoming unemployed due to the coronavirus crisis.
Under the scheme, furloughed workers receive 80% of their wages, up to £2,500 a month, if they can't work because of the impact of coronavirus.
One of the main benefits of the scheme is that it allows workers to be kept on the payroll rather than being laid off.
Furlough is available to all employees that started a PAYE payroll scheme on or before March 19, 2020, although it closed to new entrants in June.
The scheme has been extended to run until October 31, 2020, and can be backdated to March 1, 2020.
Previous rules meant that staff couldn't undertake any work for their employers while on furlough.
But from July 1, staff members were allowed to go back part-time and they must be paid in full for the hours that they work.
From September 1, employers will have to start contributing 10% of wages, with the government paying the remaining 70%.
And from October 1, employers need to foot 20% of the bill, with the government making up the remaining 60%.
The government also paid the associated employer national insurance contributions and minimum automatic enrolment employer pension contributions on top, although employers started paying these costs from August 1.
It covers salaries on the PAYE payroll but doesn't include wage top ups such as discretionary bonuses, commission or tips.
Confusion from employers has seen agency staff forced to live off 80 per cent of minimum wage - less than £7 an hour - despite typically earning far more.
Some firms have been reluctant to furlough workers at all for fear of underpaying them because once someone is put onto the scheme on minimum wage, it can't be change.
Now, HMRC has updated furlough guidelines for employees in England and Wales to include contracted discretionary bonuses when working out how much to pay their staff on the scheme.
The guidelines state: "When variable payments are specified in a contract and those payments are always made, then those payments may become non-discretionary.
"If that is the case, they should be included when calculating 80 per cent of your employees’ wages."
Discretionary tips and bonuses that aren't included in your contract, such as cash from customers to show appreciation for a service, are still excluded from the scheme.
Unfortunately, the extra income can't be backdated to when the furlough scheme began on March 1.
It will only affect pay from May and run until it ends in October.
Dr Patrick Roach, from teachers' union NASUWT, said: "The revised guidance provides much needed clarity which should mean that more umbrella companies do the right thing by supply teachers and pay them fully rather than at 80 per cent of national minimum wage."
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In Scotland, furloughed supply teachers who are on temporary fixed-term contracts will receive 80 per cent of their full wages.
Furlough pay for those who aren't on a fixed-term contract is calculated on your average earnings between January 1 and March 31 2020.
In Northern Ireland, supply teachers are employed directly by the Department for Education which has agreed not to furlough staff.
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