Following lobbying by Unite, workers who are paid through an ‘umbrella’ company are now eligible for the government’s Coronavirus Job Retention Scheme and can be furloughed during the coronavirus (COVID-19) crisis.
Lobbying by Unite the Union has successfully led to workers who are paid via umbrella companies to be included in the latest update of the government’s Coronavius Job Retention Scheme.
This means these workers are now eligible to receive furlough payments in line with the government scheme (80% of their income up to £2,500 per month) if they are unable to work during the coronavirus ‘lockdown’.
An umbrella company is an intermediary company that is responsible for paying a worker hired by another organisation, typically an employment or recruitment agency. More than 300,000 workers in the UK are paid through an umbrella company, which includes those working in a variety of sectors such as teaching, logistics and construction.
Umbrella companies are used to deal with the payroll admin for contractors and freelancers, so although workers using them pay both employers’ and employee national insurance contributions and a normal rate of tax, they are often not considered to be ‘standard’ employees – which led to fears they did not fall under the scope of the government furlough scheme.
However, the government’s updated advice now states:
“As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE: office holders (including company directors), salaried members of Limited Liability Partnerships (LLPs), agency workers (including those employed by umbrella companies), and limb (b) workers.”
Despite their official inclusion in the government guidance, Unite accept that pressure may need to be applied to umbrella companies to make sure they honour their responsibilities during the coronavirus crisis and make sure workers receive the furlough pay they are entitled to.
Unite assistant general secretary Howard Beckett said:
It was vitally important that the government confirmed that umbrella company workers were part of the furlough scheme.
It is now absolutely imperative that umbrella companies do the right thing and furlough their affected workers.
If any Unite member working via an umbrella company is not furloughed, Unite will be using all its influence industrially, legally and politically to ensure that workers are not mistreated and receive the money they are entitled to receive.
Umbrella companies that don’t do the right thing and try to cut workers adrift without pay, alongside the employment agencies which require workers to be paid in this way and the clients who allow workers to be hired in this way, will be named and shamed.