Many supply teachers have been ‘left in limbo’ amid uncertainty of eligibility for furlough payments. The reason for this is that there are several employment and payment mechanisms which are used across the sector, and Government guidance has not yet explicitly addressed furlough eligibility for every scenario. Below we break down how these mechanisms work, and what we believe furlough eligibility may be for each. In this blog we look at how schools can act now to support supply teachers who may be struggling to access furlough or other Coronavirus Job Retention Scheme initiatives.
Furlough pay will most likely be calculated as 80% of the average of your earnings since you started working for your agency (your total gross pay since you started / no. of weeks since you started, including school holidays and employment gaps). This amount will still be subject to the usual taxes.
If you work directly for a supply agency and are paid PAYE by that agency, you are eligible for furlough pay and the process for your agency to claim is relatively straightforward. This is how Teacher Booker operates.
If you work through an umbrella company there are three main ways your pay may be calculated — check your payslip to ascertain how yours is broken down:
Option 1 (Normal deductions taken from your agreed rate of pay)
Gross pay with statutory deductions, e.g:
- Income Tax
- Employee’s NI
- Employee’s Pension contribution (if applicable)
This is the correct way to calculate take home pay, and these deductions are what should appear on your payslip/pay advice in the ‘deductions’ section. Furlough claims will be based on 80% of average earnings as described above.
Option 2 – Employers costs taken from your agreed rate of pay (Alarm bells)
As above, but be aware of the following other deductions:
- Employer’s Outgoings
- Employer’s NI
- Umbrella Company/Employer Margin
- Employment Costs
Any combination of the above deductions decreases your take home pay, and may belie misrepresentation of your daily rate by your agency or umbrella company. Read more on these types of deductions on our blog here and get in touch if you need help clarifying what’s on your payslip. Furlough payments under this arrangement can be claimed at 80% of average earnings but will probably still be subject to these other deductions.
Option 3 – Pay broken into National Minimum Wage plus some other “bonus” (The wrong way)
- ‘Employment Income’ (or otherwise described) further broken down into
- National Minimum Wage (NMW) plus ‘Profit Share’ or ‘Discretionary Bonus’
Breaking pay down into NMW + ‘Profit Share’ or ‘Discretionary Bonus’ is poor practice and this mechanism may exist to exploit loopholes in tax law.
If your pay is calculated in this way, current guidelines seem to indicate that your umbrella will not be able to use the full combined amount of your pay as a basis for your 80% of average earnings furlough claim, and will only be able to claim for 80% of the NMW element.
We are working with partners in education and beyond to press for fundamental reform across the temporary recruitment sector, exposing bad actors who are perpetuating these exploitative and unethical practices. Get in touch if we can help you.
Take a look at your most recent pay advice or payslip.
Do any of these or similar appear on it?
“National Minimum Wage”
If so you may only be able to receive 80% of national minimum wage during your furlough period.