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Coronavirus payment schemes – agency workers are out in the cold – how to help

Coronavirus payment schemes – agency workers are out in the cold – how to help

Adrian Marlowe

Adrian Marlowe

By Adrian Marlowe, MD Lawspeed and Chairman of the Association of Recruitment Consultancies

It is highly commendable that the Treasury has put in place a range of financial measures to help individuals through this difficult time. One of those measures is the Coronavirus Job Retention Scheme (CJRS), otherwise known as the ‘furlough scheme’. Another is the public authority payment scheme, different from furloughing and designed for those supplying workers to the public sector. Both place emphasis on job retention and both are stated to support agency workers and those on zero hour contracts.

However, there are a number of problems as regards agency workers, some technical and some practical. Firstly, most supplied workers are not normally employed by an agency and generally have no continuity between one assignment and another. Even if there is continuity and they are employed, they generally have no entitlement to payment for any periods when they are not working and their contracts require evidence of work done for payment to be due. Holiday time does not accrue on these contracts between assignments. Contrast this with a regular employee’s contract which normally requires salary to be paid and the employer to provide work throughout the period of the contract. Holiday time accrues save during periods of agreed unpaid leave. Furlough clearly works for the regular employee but, on the face of it, not for agency workers.

As a consequence, many agencies are worried that if they make payment to their agency workers who are laid off due to Covid-19, by which I mean that the hirer has told the agency that the worker is not required in the current climate, they have no guarantee that HM Gov will reimburse them. This is because to qualify for furlough, for example

  • the employment has to continue – easy for a regular employment, not possible for an agency worker where there is no continuity
  • the job and the worker are to be retained – this conflicts with the concept of temporary work, most contracts specifically avoid retention or suspension of a job
  • employment rights must be uninterrupted – in agency contracts there are generally no employment rights as such, only worker rights and those only apply when the worker is working.

As a result, agency workers are entirely dependent on the approach taken by their agency, many of whom are reluctant participants not only because of the payment risk but also because of the cost of the associated admin. Further, there is no compulsion on an agency to participate, and lending institutions are not interested.

Under the public authority scheme the authority has to agree to pay the agency during the period of lay off and the agency to retain the worker. Operation of this scheme is entirely dependent on the public authority’s decision. Again use of the scheme is decision dependent, this time by both hirer and agency, there is no guarantee. It is a circuitous, risky and complex route to get money to the agency worker. Agency workers are out in the cold.

The problem can be remedied in one of two ways. First by government guaranteeing payment to an agency that makes payment to an agency worker who is laid off due to Covid-19, coupled with the entitlement by the agency worker to call for payment, which currently doesn’t exist. Payment by government must be made within a strictly applied timescale and payment to the agency worker must  flow through. A qualifying agency worker would need to be one who was engaged on assignment on 28th February, not one who was merely on the agency payroll, as agencies keep workers on payroll long after they have finished an assignment. Dispose of unnecessary requirements, for example for an assignment not to have naturally come to an end (noting that the possibility of an extension is obviously precluded due to the lockdown) or for employment rights to continue. These simply lead to uncertainty and confusion. The point is to get the money to the workers, not to create a bureaucratic maelstrom. This solution could apply whether or not the client is a public authority, so disposing of separate rules for private and public sector.

In the meantime whilst the government mulls over the first option, the second and more immediate option is for the agency to put in place an agreement with the agency worker. This should address the furlough requirements carefully, thereby removing payment risk as far as is possible. As mentioned, the issues are complex and the right form of contract is necessary to avoid complications (from the worker or from government scheme compliance) at a later stage. Removal of the current disincentive would encourage agencies to support their agency workers. There would be some cost involved, but on the plus side a willingness to participate would work well for reputation whilst agency workers will probably recognise those who help them in the long run. Most importantly, agency workers would get the money to help them through.

How could an agency get the right advice and form of contract? Lawspeed advises and provides the necessary terms at highly economic rates so contact us. Getting the right technical support linked to your current terms is critical to avoid future risk.

Let’s hope the government takes up our suggestion, or something like it, as soon as possible. For now, the contract route is the way to go given that agency workers must be hard pressed.

To help with the effort everyone is making to furlough and help agency workers and contractors Lawspeed is committed to donating 30% of its Covid related fees to the NHS.

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