Public Sector Furlough | Coronavirus

Public sector contractors given access to 80% furlough scheme 

After much discussion, IR35 contractors working for public sector organisations will now be eligible for the 80% furlough scheme if their contracts are ongoing and they are unable to carry on working due to the Coronavirus crisis. 

There are still no signs that the Job Retention Scheme will be extended to private sector off-payroll workers, however these new rules do mean that off-payroll workers – known as ‘contingent workers’ in the public sector have been updated so that contractors such as IT consultants who are in the middle of an ongoing contract for central government departments, their executive agencies and non-departmental public bodies, including the NHS, will receive the 80% furlough financial help via the Job Retention Scheme. 

The Cabinet Office guidance stated: ‘This approach applies to all contingent workers, whilst they are being supplied under their current assignment, no matter how long they have been in post. The only exception to this would be where contingent workers are being let go as a natural end to their assignment (ie, contract was due to finish and not be extended regardless of Covid-19). 

Who is eligible? 

  • PAYE; 
  • umbrella companies; and 
  • personal services companies (PSC). 

The furlough payment of 80% up to a maximum of £2,500 applies only to contingent workers who cannot work due to Covid-19, for example, due to sickness, self-isolation, or the temporary closure of offices or other workplaces. 

The £2,500 per month cap relates to gross pay, excluding statutory costs such as national insurance contributions (NICs), holiday pay, apprenticeship levy and pension, and supplier margin. These costs should continue to be applied where applicable as normal in addition to gross pay rate to the contingent worker. 

Some measures have also been outlined for those who have childcare responsibilities that are impacted by Covid-19, such as closure of nurseries and school provision. 

The rate of pay should be 80% (to a cap of £2,500 per month) of the rate they were paid before their absence. In accordance with the Agency Workers Regulations 2010 (AWR), the count towards the qualifying period stops for any full week of absence. 

Any contingent worker whose gross pay (exclusive of statutory costs or supplier margin) normally exceeds £3,125 per month will be subject to the cap (£3,125 x 80% = £2,500). In this case, the work will only get paid a maximum of £2,500. 

If a contingent worker’s usual hours are 37.5 per week that is equivalent to 7.5 hours per day. Therefore, a timesheet should be submitted for six hours per day for the absent days due to Covid-19 (7.5 hours x 80% = 6 hours). This should be pro rata for part-time working. 

This approach applies to all Contingent Workers, whilst they are being supplied under their current assignment, no matter how long they have been in post. The only exception to this would be where Contingent Workers are being let go as a natural end to their assignment (i.e. contract was due to finish and not be extended regardless of COVID 19). 

The Cabinet Office said the measures aim to protect: 

  • the livelihood of contingent workers and avoiding claims of unnecessary statutory sick pay (SSP) from the supply chain; 
  • against the risk that some may attend work when they should be self-isolating, thereby potentially infecting wider teams and the broader general public; 
  • against the risk of losing critical workers to jobs in other sectors because they are not getting paid; and 
  • supplier revenue with the intention of keeping them solvent so they remain a part of our ongoing supply chain in the future. 

Click Here for more info.

If you have any questions, please email us on info@raffingers.co.uk

Raffingers will be covering all of the Coronavirus updates as and when they come through from the government so sign up to our Coronavirus update mailing list by clicking here.