COVID-19 support extended to thousands of public sector contractors

Many public sector contractors will receive income support if COVID-19 stops work

The Government has revealed a support package to protect thousands of public sector contractors, umbrella workers and agency PAYE workers who cannot work due to COVID-19.

An official guidance document created for public sector bodies details plans to continue paying ‘Contingent Workers’ (who can be defined as PSC contractors, umbrella and agency PAYE workers) with 80% of their pay rate up to a maximum of £2,500 per month. It will apply to all Government departments, their executive agencies and non departmental public bodies, with other public sector organisations encouraged to implement it also.

This scheme will be available in the event that Contingent Workers can’t work, whether because of temporary office closures, sickness or self-isolation. The guidance also states that in some cases this may apply to those who have childcare responsibilities too. Importantly, individuals working part-time on public sector projects where the scheme applies are also included.

The monthly payment received by Contingent Workers is to be backdated to 1st March (if necessary) and is available for at least three months. Although, much like the other existing income support schemes, this may be extended if necessary.

For contractors whose contract will end naturally in this period, the public sector body isn’t obliged to provide any support past the point at which the contract finishes.

Why has the Government announced this?

The reasons for this move are clear. In addition to protecting the “livelihood of Contingent Workers and avoiding claims of unnecessary Statutory Sick Pay”, the Government wants to avoid “losing critical workers to jobs in other sectors because they are not getting paid.”

So it could be said that the Government has done this purely to ensure the public sector retains the skills of contractors throughout the COVID-19 outbreak. Even so, on the whole, it’s considered a smart move and the right thing to do given the circumstances.

Which departments and bodies does this include?

The initiative, that resembles the Coronavirus Job Retention Scheme for employees but is based on pay rate rather than PAYE earnings, will apply to all Government departments, their executive agencies and non-departmental public bodies. This includes the likes of the NHS, the Home Office, the Treasury and Ministry of Defence. A full list can be found on the Government website here.

Other public sector organisations have been encouraged to roll out this scheme to Contingent Workers. Although, for these bodies, it’s not mandatory. Therefore, contractors with public sector clients that aren’t obliged to offer this should contact their engager and or agency to discuss the matter.

Will this be extended to private sector contractors?

At the time of writing, it seems unlikely. And while it’s important that the Government recognises that public sector contractors working on the front line in the fight against COVID-19 are vital, this move has brought the treatment of private sector contractors into sharp focus.

As things stand, private sector contractors do not qualify for the Self-employment Income Support Scheme (SEISS) given they work via a limited company and draw dividends from their business. Meanwhile, the low PAYE salary that most contractors draw from their companies means the amount they would receive from the Coronavirus Job Retention Scheme (should they first reclassify as a ‘furloughed worker’) would usually only equate to 80% of around £700 monthly.

There is, however, a petition calling on the Government to include all limited company contractors in its COVID-19 support. It currently has around 300,000 signatures and is gaining momentum.

For more details regarding the instructions for paying Contingent Workers in the public sector, please visit the Government website here.