IMPORTANT: The Job Retention Scheme and What Contractors Need to Know

08 Apr 2020

The UK Government have been assessing ways to support both businesses and contractors via their Coronavirus Job Retention Scheme.

Last week, details were released on how the Job Retention Scheme would apply and how the self-employed will be able to access support during these very difficult times.

In this article we aim to provide a summary of the current scheme and how it may affect First Recruitment Group contractors. This summary is subject to confirmation from the Government and any changes that might occur following this.

Please note we are working with our clients to help them understand how best to use the Job Retention Scheme, however if clients are not in a position to retain a contractors position and re-engage them in the future, it may be necessary to issue contractual notice.

Temp PAYE workers

If an end client needs to “stand down” a temporary PAYE worker, but wishes to re-engage them in the future, they can be deemed as “furloughed”. To qualify as furloughed, the PAYE worker must be stood down for a minimum of 3 weeks. They will be entitled to a monthly payment equivalent to 80% of their average monthly earnings up to a maximum of £2,500 gross.

Example: If a PAYE worker currently earns an average of £2,000 per month, their entitlement would be £1600 gross per month.

The UK Government has agreed to meet furlough payments up to the end of May. Note this could be reviewed subject to further COVID-19 developments.

If a worker has been issued notice, unfortunately they cannot be furloughed and will need to seek support via other government benefits schemes.

Umbrella workers

With similar criteria to a temporary PAYE worker, an Umbrella Company (as the employer) will be able to make payments to eligible Umbrella workers via the Governments Job Retention Scheme.

PSCs (Ltd Company) workers

Whereas the employer of a PAYE or Umbrella worker is responsible for accessing the Job Retention Scheme payments, PSCs must access the Self-Employed Scheme directly. The Government have said, “Those who pay themselves a salary and dividends through their own company are not covered by the scheme but may be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.”

Be assured, if we can help, we will

Our team at First Recruitment Group are working hard to help both our clients and our contracting workforce, seeking to protect as many people’s jobs as possible. However, please be aware that the finer details of the Job Retention Schemes are still being developed by the UK Government.

We will continue to stay close to our clients to understand their intentions, and will communicate any changes, as soon as they clarify their workforce plans. If you are a contractor working through an Umbrella company we will notify your Umbrella Company of the situation, and you should contact them directly for further information.

We understand how difficult and worrying this is for many of our contractors. That is why will continuously look for ways to help and keep you updated on the latest advice, clarifying how the Governments schemes may be able to help you. We are all in this together!