Government sweetens COVID-19 pay guarantee, albeit just for its own contingent workers

An 80% salary scheme for private sector workers hit by COVID-19 is being widened to the central government sector, albeit with tweaks so the state can ‘look after its own’ even better.

To spare them the confusion which umbrella, PAYE and PSC contractors in commercial roles endured with the CJRS, the new state scheme clearly says all three worker-types are eligible.

Similarly, while such contingents for ‘central departments, their executive agencies and non-departmental bodies’ like the NHS can now get the grants, they have no time criteria to meet.

'No matter how long they have been in post'

So, whereas CJRS coverage requires a payroll on or pre-Feb 28, the state scheme is for “all” contractors “supplied” under their current role “no matter how long they have been in post.”

The only time criteria to net 80% of the contracted “pay rate” (capped at £2.5k a month), is that the worker had to have a “live” role “at the time at which they became unable to work”.

And ‘unable to work’ may be due to sickness, self-isolation or “temporary closure” of client offices, the guidance adds. But it neglects to mention ‘furloughing,’ which the CJRS requires.

'Paid on the total rate, not just PAYE'

Qdos, an advisory to public sector bodies (which beyond central government entities are only being encouraged into the scheme), says the grants are “important.” And, so far, overlooked.

“My gut feeling is that government wants to support contractors working for public services like the NHS, which is [currently especially] difficult to argue with,” says Qdos’ Seb Maley.

“Contractors, agencies, and public bodies need to be aware of this…scheme [which] is similar to the CJRS, but the 80% is paid based on [the total paid] ‘rate,’ not [just] PAYE.”  

'80% of their gross pay'

Law firm Aaron & Partners confirmed that while the state scheme for contingent workers is indeed “similar” to the CJRS, on take-home pay; it appears much better.

“Contingent workers working for public sector organisations including via umbrellas or PSCs…[are in line to] receive 80% of their gross pay”, said the firm’s Claire Brook.

Of the scheme, which umbrella, PAYE and PSC contractors can only use if no ‘WfH’ option exists, she added: “This update is significant for public sector contingent workers.

“[Because until now], the government guidance on the CJRS stated that ‘where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff – and correspondingly not furlough them.’”

'Positive'

So, it must be a “positive”  that the government is reviewing its policies as the pandemic evolves, to help both employees and non-employees alike, the employment law expert said.

But there is a negative, according to the Independent Health Professionals Association. And while it’s less about the scheme’s design, it similarly falls to the government to clear it up.

“PPN02_20 is a welcome relief…[at a difficult time, but] uptake of the scheme is quite poor…mostly due to misunderstanding”, begins the IHPA, whose members work on the NHS.

'None the wiser'

The IHPA adds: “A number of suppliers… out of contract as a direct result of COVID-19 for between three and four weeks, are still none-the-wiser about what is going on.

“Not only do they not know what to do, or when, but are also relying on the procurement frameworks for guidance on the matter.”

The association’s legal head Stephen Mhiribidi believes the situation is being “exacerbated” by many workers getting paid via umbrellas “forced” onto them by suppliers.

'Impasse'

“But the umbrellas are also at a supposed impasse, because they need a number of issues clarified by the government when it comes to the CJRS,” he says, further explaining:

“The umbrellas claim that they cannot do anything until they have clarity on these matters, and meanwhile you have contingent workers lounging at home with no income whatsoever.

“[So while it’s good] the government has acted to protect business and employment, the vehicles to implement these gears are cogged. The government needs to clarify all the queries and get the umbrellas and suppliers moving.”

'Certainty'

Yesterday, the Recruitment & Employment Confederation welcomed the scheme, under which contingents who believe they are eligible are advised in the guidance to contact their suppliers “in the first instance”.

“It provides certainty for temporary workers in central government departments that they will continue to receive 80% of their [rate] if they are unable to work due to coronavirus”, said the REC’s head of public affairs Sophie Wingfield

Of the scheme, which maxes out at £125 a day for 20 days a month (for three months “initially”), she added: “We strongly encourage other public sector bodies such as local authorities and schools, for which this is only a government recommendation, to apply”.

'Very concerning from an IR35 standpoint'

Yet while the scheme could “cover most of the public sector,” as requirements like the worker submitting a timesheet and a summary of their inability to work due to covid-19 are easily transferable, an IR35 expert sounds very cautious as to whether it should.

“In my opinion, [this scheme is] very concerning for PSCs especially those outside IR35, as they will likely be paid for doing no work, which equals Mutuality of Obligation,” cautioned status specialist Kate Cottrell.

The co-founder of Bauer & Cottrell also said: “I suspect that outside IR35 contractors will not be able to rely on any kind of amnesty -- if there were ever to be one [from an HMRC making an allowance like,] ‘these were exceptional circumstances so we will ignore this.’

“Therefore, if possible, outside IR35 contractors should try to do some work to protect against any future IR35 investigations. All in all, another big mess is unfolding.”

'Protecting their own'

Asked for his own reaction last night, another ex-Revenue official said: “There’s a couple of reasons this comparatively generous scheme from the government has come about.

“Primarily they will be paying up because they consider most [of these central government contingent workers] will be working anyway. And also, doing it this way [means] that there will be no claims via other routes, so alleviating pressures on HMRC.”

'Coronavirus nightmare'

The former tax inspector also said: “Above all, the government is demonstrating that they are protecting their own contingent workforce -- if only so they can be ‘ready to go’ when this coronavirus nightmare is over and without having lost folk to the private sector.”

At Qdos, Mr Maley shares the former taxman’s assessment.“[The contingent workforce scheme for those supplying central government] is positive news for public sector contractors, who now may be supported. Even so, it does raise questions about the treatment of private sector contractors,” he said, “who won’t receive much support.”