Contractors engaged on assignments for central government clients who are unable to work due to COVID-19 have been made eligible for financial support at a rate of eighty per cent of their usual pay rate up to a maximum of £2,500 per month, new government guidance has clarified.
The payments will be available to “all categories of Contingent Workers”, including PAYE, umbrella company and limited company contractors, working at all central government departments, their executive agencies and non-departmental public bodies.
If contractors can continue to work from home they will be expected to do so and will be paid in the usual way. However, if they are unable to work due to COVID-19, for example due to sickness, self-isolation, or the temporary closure of offices, they will be eligible for the eighty per cent payment, which can be backdated to March 1 if necessary and will be available initially for at least three months.
The Cabinet Office guidance note that explains the policy said that the measures aim to protect the livelihood of contractors, avoid unnecessary Statutory Sick Pay claims across the supply chain, ensure that contractors who should be self-isolating do so and do not attend work, and to protect the government from losing contractors who are not getting paid to the private sector. Commentators have also suggested that making the payments in this manner will alleviate pressure on HM Revenue & Customs.
The measures do not include the requirement that the contractor was paid on or before February 28, as the Coronavirus Job Retention Scheme for employed workers requires. Local authorities are not under obligation to take up the measures, although the Cabinet Office has “recommended” that they do.
Seb Maley, CEO of IR35 specialists Qdos, said: “The Government has taken an important step in protecting many of the contractors working on the front line in the fight against COVID-19.
“Making this support available to locum doctors and nurses engaged by the NHS, who are working long hours and risking their lives to help the UK beat this virus, is the right thing to do.
“As vital as this initiative may prove to be for NHS contractors and others working in the public sector, there are hundreds of thousands of individuals in the private sector who have and will lose their income but have been overlooked again.”
However, Kate Cottrell of Bauer & Cottrell cautioned that outside-IR35 contractors may risk jeopardising their employment status by receiving payments whilst not at work: “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.”
14th April 2020.
