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Agency Workers Directive – what ever happened to “simplification”?

Agency Workers Directive – what ever happened to “simplification”?

The final form of the guidance for the upcoming Agency Workers Directive has been published. This has not been the subject of any great debate so far, but it does have the capacity to really shake up some corners of the contractor market. And it appears to contain a sting in the tail.

The AWD has a noble aim; it intends to ensure that agency workers – which it defines as those providing temporary services to clients via an agency – are not disadvantaged in terms of the protections and rights enjoyed by full time employees. However, being an EU-derived concept, our beloved Civil Service has failed to recognise the very different nature of the “agency” model in the UK compared to the rest of Europe. While protecting the rights of the lower paid employee of the agencies supplying temporary staff to a whole raft of industries from farming to pharmaceuticals, it also wraps up the traditional freelance contractor in its scope. And that’s not a good thing.

In the earlier consultations, the PCG picked up on the potential for this scope mismatch and were assured that Limited Company contractors would be out of its scope. The early proposed form of the Directive did in fact specifically exclude those working through their own Limited Companies. That was not considered to be much of a problem, naturally enough.

Now, however, that phrase has been watered down. It contains a further qualification, “those operating as genuine businesses”. So here we go again, we are once more being presented with the finely crafted clarity of the mud-encrusted IR35 legislation.

You may recall that Osborne kept IR35 on the statute books at the last election as a deterrent to people who may incorporate to avoid the taxes they can no longer save by using offshore EBTs. My suspicion is that they have the same qualification about “genuine business” in the AWD for exactly the same reason. This is fine as long as there is a clear definition of a “genuine business”. Which there isn’t.

One of PCG’s objectives with the HMRC’s IR35 Forum (when it gets of the ground) will be to try and define how you recognise a genuine business. Simple enough if you’re Tesco or the corner shop, rather more tricky if you are a one or two man company selling your skills and knowledge to the highest bidder. The level of debate that has been engendered within PCG about how to make that definition has to be seen to be believed, so I have no expectation we will see a quick answer. .And until we do, we remain exposed to HMRC’s biased concepts. But hey, we’re getting used to that.

The other victims are the umbrella companies who will have to keep their “clients” – who are de facto employees of the umbrella – fed and watered while they are out of contract. Wonder if anyone has told those clients who will be paying for it…?

And finally, of course, those hugely risk averse recruitment agencies will see the AWD as yet another set of hurdles to overcome to prevent any possibility of their being made responsible for the contractors who they sell to the end clients as their own staff. Expect a whole new layer of miasma to creep into the contractor-agency contracts to ensure the contractor is obeying the demands of a law that doesn’t actually apply to them at all.

Plus ca change, plus ca meme chose. What ever happened to “simplification”?

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited<

Image: morning face by silas216

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