2020 for many has been a year of uncertainties, and a year of frustration.
With the outbreak of Covid 19 causing both fear and frustration, the knock-on effect that it has had has been much more far reaching than anticipated.
From people losing work due to the various lockdowns, to panic buying and food shortages, our great nation had seemingly fallen into a state of chaos and uncertainty.
Help has been on hand from HMRC in the form of loans, grants and business support as well as what has probably become the saving grace for many people in this unprecedented situation, the JRS or Job Retention Scheme .
The JRS (and also known as the Furlough Scheme) has been put in place to help businesses retain their staff whilst in lockdown. It also enabled workers to retain a regular income when work was not available or where they were potentially being made redundant.
The JRS has allowed workers to receive upto 80% of their usual take home wage. This was a figure that fluctuated as HMRC tried to return the country to some semblance of normality once the suggested ‘peaks’ had passed. Unfortunately the peaks kept coming so the scheme continued returning back to the 80%.
Left Out In The Cold
The scheme itself had not been prepared to give much thought to agency and umbrella workers and this caused much confusion within our industries.
Agencies that run their own payroll have the ability to run the scheme with no issues but agencies that use an umbrella as an intermediary could not. This has meant that the responsibility of running the JRS for contracted workers fell to the umbrella.
The confusion when running the scheme through an umbrella centers around the National Insurance Employers Contribution (NIERS) and the employers pension contribution. Both of which are picked up by the contractor when working through an umbrella.
As these amounts are usually picked up by the employer, under the JRS it looked like the umbrella would have to pick up the cost at a loss to their business. Obviously this would be an unsustainable business model due to the fee structure that umbrellas have in place.
This meant that many umbrella’s refused to offer the JRS leaving contractors that worked with them out in the cold with no sustainable or regular income. They stated that until clear guidance was provided they would not offer it.
The FCSA lobbied on behalf of umbrellas for guidance but information and communication from HMRC was in short supply.
Supporting Our Temporary Workforce
Some umbrellas like Payments Pro decided that offering the JRS was the right thing to do, despite the lack of guidance. It was decided that the outcome of the situation would need to be dealt with at a future date as contractors were becoming desperate for support. There were many workers that needed help and had nowhere else to turn except for the umbrella.
It should be understood that running the JRS is at the cost of the umbrella. Unlike the normal processing of umbrella payroll where a fee is taken, the JRS is processed fee-free despite it being more involved than the usual running of umbrella payroll.
Payments Pro have continued to provide the JRS and have ensured that the contractors we work with have continued to receive an income and the support that they deserve.
If there is one thing that has become a positive in this situation is that employers have had to embrace the ‘work at home’ senario. Prior to this, working from home was a grey area where there was distrust and a lack of confidence in operational efficiency.
Many businesses have found that even outside of this situation it can be a viable operational structure that they can use going forwards. Overheads can be reduced and in some cases the office environment has become obsolete and an unnecessary expense.
Staff have risen to the occasion and over performed with statistics showing that worker efficiency and productivity have increased.
End In Sight?
With the vaccine now being rolled out, it seems like the end may be in sight with hopefully some semblance of normality being seen by Summer 2021.
Follow the rules and stay safe, we are not out of it yet. We all must do our utmost to protect ourselves as well as those around us.
Here’s looking forward to better times ahead!