Job Retention Scheme Job Retention Scheme
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  1. #1

    Nervous Newbie


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    Mar 2020
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    Default Job Retention Scheme

    This doesn’t seem to be making any progress for umbrella contractors.

    My MP has confirmed that government is reviewing policy on the bases of payment but commission/ bonus is currently excluded.

    I haven’t seen a clear explanation for why umbrellas split pay between an amount equivalent to national minimum wage and a commission/ bonus element. Is there an article or thread that explains this?

    Umbrellas clearly wouldn’t have been able to anticipate the job retention scheme when they determined the structure of payments to their employees. However, I’m struggling to see any advantage to me in this structure and, as someone who signed up to my umbrella recently, I know that it wasn’t mentioned during that process. I think this has the potential to end up in court if the government doesn’t sort it out.

  2. #2

    Contractor Among Contractors


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    Quote Originally Posted by Jemetpl View Post
    I haven’t seen a clear explanation for why umbrellas split pay between an amount equivalent to national minimum wage and a commission/ bonus element. Is there an article or thread that explains this?
    My understanding is that the Umbrella is legally required to pay the minimum wage (since you are their employee), even if (for any reason) the monies from the client have not reached them - therefore, the Umbrella is at risk of being out of pocket if the invoice is never paid.

    By splitting out the remainder into a commission/bonys element (I've also seen it called "Additional Taxable Wage" on one Umbrella payslip), they can legally defer payment of those elements of the payslip until they have actually received the funds themselves, thus mitigating their risk.
    Last edited by Paralytic; 24th April 2020 at 08:46.

  3. #3

    Fingers like lightning


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    Default

    Also assists with pension, as auto enrolment can be based as a percentage of the basic, then the contractor can choose if they wish to increase that (although some umbrella's dont offer this option).

  4. #4

    Nervous Newbie


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    Quote Originally Posted by Paralytic View Post
    My understanding is that the Umbrella is legally required to pay the minimum wage (since you are their employee), even if (for any reason) the monies from the client have not reached them - therefore, the Umbrella is at risk of being out of pocket if the invoice is never paid.

    By splitting out the remainder into a commission/bonys element (I've also seen it called "Additional Taxable Wage" on one Umbrella payslip), they can legally defer payment of those elements of the payslip until they have actually received the funds themselves, thus mitigating their risk.
    Thanks for this.

    My umbrella (Paystream) uses payment from my agency to trigger its payment to me. However, I guess that if that payment wasn’t made, this mechanism would protect the umbrella if I started demanding payment.

    If the mechanism you describe is correct, I’m surprised that umbrellas don’t feel obliged to pay 100% of minimum wage to furloughed contractors irrespective of the retention scheme.

    I understand that Paystream will be emailing it’s contractors today to provide an update.

  5. #5

    Nervous Newbie


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    Well Paystream have finally confirmed that they will make furlough payments but only at national minimum wage.

    I’ve challenged them to provide a coherent explanation of why they believe that the salary/ commission split is normally to the contractor’s afavantage. If they can’t do that and it is, in fact only to their advantage, I’ve asked them to explain why it wasn’t mentioned during the sign up process.

    The amounts of money involved here aren’t trivial but hopefully this matter won’t need to involve solicitors.

  6. #6

    More time posting than coding


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    Apr 2020
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    This is so funny.

    So there is an outrage that contractor pays small salary + dividend, but there is no outrage that umbrella pays small salary + bonus?

    There is of course NI on bonuses, so why not do NI on dividends and scrap IR35 altogether?

  7. #7

    Nervous Newbie


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    Paystream have just emailed you confirm that “commission” can be included in furlough payments!

  8. #8

    Nervous Newbie


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    May 2020
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    Hi All,

    I see that Pay Stream have confirmed they have received advise from the Government on this. Great news for people employed via Pay Stream.

    My contract will not be being renewed due to COVID19 budget restraints, and I am unlikely able to find work in the immediate future due to COVID19.

    Pay Stream set out one of the criteria stipulating;

    "You are unable to work or find work because of the COVID-19 outbreak. This includes if you are self-isolating or shielding in accordance with Government guidelines or if you have caring responsibilities. It also includes where your assignment has been suspended, terminated or not renewed for COVID-19 related reasons (such as a site shutdown) or you are unable to source new assignments due to the current crisis. If the reason that you cannot work is not related to COVID-19 then you will not be eligible."

    Now unfortunately, I am not with Pay Stream, but with Parasol, and they have outright said I am not eligible, even if I have a letter from my assignment manager saying my contract was not extended due to COVID19. This is Parasol's criteria.

    • You were payrolled by Parasol on or before 19th March 2020
    • The assignment was terminated early due to COVID-19
    • They did have three weeks or more left on the assignment prior to it being terminated (three weeks being the minimum term of a furlough)


    This is outrageous, how can one Umbrella company have different guidelines to another?! Seems very shameful.

    Can anyone help me out here.

  9. #9

    Nervous Newbie


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    My understanding is that the employer and employee have to agree to the furlough. The employer can also rehire the employee for the purposes of furlough if they terminated them.

    Unfortunately I don’t know how this plays into your scenario but Parasol don’t seem to be behaving fairly in providing the support that their contractors I. Your situation need. Unless they have a different infersyandjng of the law I think they are being unreasonable. It might be worth looking for some free initial legal advice.

  10. #10

    Should post faster


    Join Date
    Nov 2011
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    I'm with Contractor Umbrella. I meet all of Parasol's three stated criteria, but the last word from them (and I don't think they're by any means the only brolly taking this stance) is that at this stage, they won't furlough anyone regardless.

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