Umbrella company refuses to furlough

Highway618

I've been employed for the last 18 months through umbrella company on an assignment with a financial services company. 100% PAYE so any support I'm entitled to to would be through the Coronavirus Job Retention Scheme, not the equivalent for self-employed people.
My contract was due to end yesterday. Nothing to do with CV-19.
I emailed the umbrella company on Friday asking them to furlough me. As the Gov't guidance and Martin Lewis both recommend.
They've responded as follows:

I have been in touch with our legal department and they have advised that ‘if the Client (D****) has not confirmed an extension beyond the 31 March, then the Assignment ends on 31 March 2020. The position in relation to furlough is not yet confirmed, but it is unlikely it would apply in a scenario where the Assignment has ended and the Client (D******) does not want to retain the worker.’

My reading of the government guidance is that being furloughed under the scheme is based on being on payroll 28/2/20 and earning PAYE. There is no requirement I can see for agencies/umbrella companies to apply criteria about what was/was not going to happen to someone's employment after that date. If you qualified on that date, the employer can furlough you. With no obligation to rehire you at the end of the CJRS.

Indeed, as Martin confirmed yesterday, people who voluntarily left employment after 28/2/20 can be rehired and immediately furloughed and the government are fine with that.  

I know the unbrella company can choose not to furlough if they don't want to. But I cannot see any reason why they couldn't do it if they wanted to. Am I wrong?

strawberries1

I work for a local authority via an umbrella company they will be ending the assignment in 3weeks.

daKlone

Sadly yes, you are wrong.

Umbrella companies are not furloughing employees because there are various costs that they themselves have to bear, none of  which are covered by the Govt. scheme:

1) They have to give credit for annual leave accrued during the furlough period;
2) Whilst they don't have to pay Employer's NI, they still have to pay Apprenticeship Levy;
3) They still have the same overheads per employee.

So these are direct losses that they suffer for each furloughed employee. So whilst I'm not happy about it (as a non-furloughed umbrella employee myself, currently receiving a total of £0/month!!), I can see why they don't do it.

jfinnie

There are other issues too.  Usually you get charged by an umbrella for the service of them running payroll etc; I think last time I was with an umbrella it was about £25 a week (ish).  However it is illegal as I understand it for them not to pass on the whole of the furlough pay.  SO via what mechanism do they cover their costs?

daKlone

Exactly; there is no mechanism under the current Govt. scheme, therefore no furlough for umbrella (or agency) employees.

Galloglass

Seems straightforward enough. There is no job as it ended in March. There is no forward employment contract to protect using the scheme so no furlough. No redundancy either as you're not really an employee of the umbrella company. So best to check your entitlement to Universal Credit using a benefits checker like Turn2Us.

Kegs24debut

Hi I have been on continuous employment with my umbrella company since October 24th my first payment was 12/11/19. I’m 100% PAYE and this believe I’m eligible to be furloughed. They rejeected
my furlough and stated it was due to government legislation yet looking at the guidelines on gov uk I tick all the boxes for eligibiliy. I had an assignment start on the 17/03/20 and was a rolling contract. My umberella company is telling me as I didn’t start the assignment or actually do any work for the company they won’t furlough me even though I’ve been on their payroll before 28/02/19. Also they asked for written evidence form my recruitment agency that my assignment was impacted due to COVID 19 which they confirmed with the umbrella. Is it government legislation that even though my assignment was impacted and ended early due to the impact of COVID 19, that because I didn’t do a days work for them I cannot be put on furlough they are telling me it’s solely due to government legislation. I feel it is because they have invented company policy to prevent them from placing me on furlough. Any ideas and information would of course be much appreciated as I’d like to know how to proceed. I will push them but I fear this won’t change their opinion on furloughing me.

jayzor

There really isn’t anything you can do, you can’t force them to furlough you and they have no obligation too. It is worth looking at Universal Credit if you are entitled.

sharpe106

The furlough scheme is optional so if they want to put their own rules on top of the government they can. As you were on the payroll they can furlough you but it costs them i.e. holiday pay and they have nobody to pass that onto. For some people that have been furloughed from March the holiday pay will now be quite a bit for struggling companies to find.

Jeremy535897

I am not convinced about this "holiday pay is at 100% of pre-furlough pay" statement, at least in relation to fixed rate employees. If their contract of employment has been amended to reduce their pay, that reduced pay could become the holiday pay rate. Furlough is based on pay in the last pay period ending on or before 19 March 2020 for fixed rate employees. Holiday pay for fixed rate employees is based on the pay before the holiday date. I don't think the government is convinced either:

"Furloughed workers

An employer should not automatically pay a worker on holiday the rate of pay that they are receiving while on furlough, unless the employer has agreed to not reduce the worker’s pay while on furlough.

If a worker on furlough takes annual leave, an employer must calculate and pay the correct holiday pay in accordance with current legislation - see the standard guidance. Where this calculated rate is above the pay the worker receives while on furlough, the employer must pay the difference. However, as taking holiday does not break the furlough period, the employer can continue to claim the 80% grant from the government to cover most of the cost of holiday pay."

https://www.gov.uk/guidance/holiday-entitlement-and-pay-during-coronavirus-covid-19

If holiday pay is always at 100% of pre-furlough pay, why is this qualification in bold needed?

This needs an employment lawyer to look at it. The legislation is not straightforward.

SXX

Hi - just to share my experience - in case it helps.  I am an agency worker who was on agency PAYE as at 28.02.  My temp booking came to a natural end on 03.04 (nothing to do with covid 19).  Since then I have not had any work because my agency's temp business frozen due to Covid 19. Under normal times I would be working.   Agency refused and refused to furlough even though I am eligible. I wrote to my MP who wrote to agency.  Agency still refused to furlough.  So MP wrote again to challenge their cooked up reasons (truly I am not exaggerating) for refusing furlough so finally they have now agreed to furlough.  PLEASE NOTE THE FOLLOWING 1) in the meantime agency is furloughing its own staff but refusing eligible temps.  How wrong is that.  2) it will NOT cost my agency anything to furlough me because I have a contract for services contract so they wont have to pay holiday pay; agency is not a large enough to pay apprenticeship levy which businesses have to pay if their pay bill is over £3million per annum.  3) my agency can a claim everything through the grant.  It basically refused to do the right thing until my MP got involved but they initially fobbed him off too but we challenged their decisions.  I have worked and paid my taxes for 40 years so that I can bail out the agency's permanent staff.  Really?