Job Retention Scheme.
Without doubt you would have heard about the government initiative called the Job Retention Scheme (JRS). In its most simple form, the JRS allows employers to furlough staff who would otherwise have been laid off due to the Coronavirus. The scheme allows employers to pay 80% of a furloughed employee’s wage, up to the £2,500 cap, claim this back from HMRC plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
Unfortunately, there is a major problem with this scheme which makes it impossible for any employment agency to sign their temporary staff up to this scheme. Quite simply anyone on the JRS will continue to accrue holiday pay. This means that although the government will reimburse the 80% of the salary and cover the employers NI and pension payments for the 80%, they will not pay the holiday pay accrued during the furlough period or the resulting employers NI and pension. The employer will have to pay this. For that reason, we are not able to offer this service to our temporary staff. If you imagine one temp per week on average will accrue £55 holiday. Add employers NI and pension to this and you are looking at around £65 per person. Times that by 100 and you have £6500 per week real cost and real loss.
I know many of you will say I would rather have the 80% and forgo the holiday pay. I have asked that question. Legally that is not an option. I have raised this issue with advisory bodies including The Recruitment and Employment Confederation, APSCO and CBI amongst others. As this scheme is not only new but in fact not operational until the end of April we can only go on the guidance given to us by government as it stands today.
I would love to be in a position to help as many of you as possible become part of this scheme, but my hands are tied. Not only do the government want us to fund the payments in advance but as explained earlier running the scheme will make us bankrupt. However, I strongly suggest that you write to and telephone your local MP. This time last week it was not clear whether agency staff would be included at all. That changed. If enough people, and there are millions of temporary workers in the UK, push for more flexibility there is a chance the legislation could change. Put simply we just need the holiday pay accrual part of the scheme removed for agency staff.
As a point of interest, the government have advised that any key workers in the public sector are furloughed on full pay and the agency are to charge the client as normal. Hence the issue discussed above is removed.
These are challenging times for us all. Things are changing on a daily basis. Use your voice with your MP and see if you can help get this holiday pay clause removed for the period of furlough.
I am of course happy for you to pass this email and my details to any MP who asks.
I will keep you updated as I hear more.
All best wishes
GRAY & ASSOCIATES RECRUITMENT SERVICES