Contractors paid via umbrella companies are still waiting for precise clarification if they definitely qualify for the Government’s much-heralded Job Retention Scheme (JRS) and, if so, how and when will they will be paid. In theory, the scheme entitles all furloughed workers to receive 80% of their pay up to a maximum of £2500.00.
Solutio’s Communication’s Director, Andrew Pinnell, posited the question to Martin Lewis on Radio Five Live this morning and his answer further highlighted the lack of clarity emanating from Downing Street. Martin confirmed that, in principle, contractors being paid by umbrella companies do qualify for the scheme providing they meet the following two criteria:
Upon first hearing, contractors were no doubt comforted by his response, but the devil remains in the detail. Most umbrella contractors net pay is calculated using the National Minimum Wage (£8.21 per hour up to the end of March 2020, rising to £8.72 in April 2020), plus, in certain circumstances, various bonuses and commissions.
Questions remain as to exactly what figure will be used to calculate a worker’s 80% net earnings; will it be just the NMW and if so, which figure, £8.21 or £8.72? If either option is the case, paying the worker 80% will actually breach the Government’s own guidelines with regards to NMW. Umbrella workers who earn more than the NMW are worried about losing a significant part of their income.
Accepting that the whole country is experiencing an unprecedented lockdown and impending financial chaos, both Martin Lewis’s response and the latest Government guidance should offer some relief at least to the contracting community.
More updates to follow no doubt…
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