Tag Archive | "agency workers directive"

Is there a glimmer of hope in otherwise dismal economic times?


You cannot have failed to notice that there’s been a bit of trouble brewing in the Eurozone recently.

The UK’s membership of the European Union has never suited everybody and sure enough, the “Get out of Europe” brigade is having a field day.

Since we joined the EU, it’s been quick to impose thousands of regulations on us, many of which are expensive to implement and heap pointless bureaucracy on British businesses.

Take the Agency Workers Directive for example. The CBI warned that 250,000 jobs could be at stake if it was implemented and Open Europe has estimated that 80% of those affected will be in the UK. Furthermore, the impact assessment conducted by the Government estimated that it would cost British businesses £3.7 billion to prepare for AWR.

Then we have health and safety regulations. It has been estimated that health and safety regulations have cost the British economy £176 billion over the last thirteen years and 71% of that can be attributed to legislation from the EU. That’s almost £125 billion the UK has spent courtesy of the bureaucrats in Brussels.

If countries continue to muddle through the current crisis, the chances are that nations like Greece, Italy, Japan, Portugal and Spain plunge back into recession. There would also be a 70% chance of that happening in the UK.

Amid all the chaos it would have been easy to miss one piece of good news from the ONS! The UK CPI inflation rate dropped to 4.8% and the RPI fell to 5.2% last month; both down 0.2 percentage points. The Bank of England now expects inflation will drop to under 2% within the next 18 months. That will be something to look forward to!

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AWR – instead of clarity we get muddle and greyness


Regular readers – both of them – will have learned by now that if someone ever sets up an Appreciation Society for the benefit of Saint Vince of Cable I am unlikely to be in the queue for tickets. His tenure as Business Secretary has been littered with decisions that seem almost deliberately intended to make the contractor’s life even more difficult than it already is. I doubt he does it on purpose, so we have to conclude that he simply doesn’t think things through properly. Or perhaps he doesn’t pay attention to the outcomes. Well, hey, he is a politician, I suppose.

Consider the Agency Workers Regulations, which are looming ever larger on the horizon. The intent of the original EU-derived ruling was to ensure that low level temporary workers – people who aren’t really in the best place to fight their own corner – are protected from being denied basic rights that are taken for granted by permanent employees; little things like holidays and sick leave and access to the canteen. It has to be said, that is an entirely reasonable and even laudable aim.

As is the way of such legislation, the EU sets the objective and leaves it to the member countries to enact as best they can. So guess what happens when St Vince’s department get hold of it?

Firstly there is a consultation period. They produce a straw man proposal and invite interested parties to comment on it, note ambiguities and errors and suggest any obvious improvements. They consider the responses, redraft the straw man into a final document and that become the legislation.

Except for one minor point. They kind of missed the ever-so-slightly critical point about the scope of the legislation.

Like I said, it’s meant to protect vulnerable workers. Now I am many things but I don’t for one minute consider myself to be vulnerable to being downtrodden. Apart from She Who Must Be Obeyed of course, but I volunteered for that one. So why the hell am I potentially in the scope of the AWR?

It seems that DBERR have been gold-plating the requirement. Specifically, rather than draft something aimed at “agency workers” they allowed it to cover any independent worker, including freelance contractors who, as a breed, are probably the least vulnerable workforce in the country.

And what makes me angry (and No 10, who tried to see if it could be redrafted at the eleventh hour) was that very point was made, clearly and explicitly, in the original consultation. They were told the scope is wrong, it’s not meant to apply to this group but only to that one. But when the final draft hits the presses the only exemption is the somewhat mealy-mouthed exclusion of “those genuinely in business” which, as we know all too well, is not a clearly defined anything. They may as well have said “Those who are either taller, or shorter, than six feet. Without shoes”.

So apart from now facing the risk that our contracts are going to get even more tangled as HR and the agencies try to get around the legislation, we lost the chance for a clear chance to define exactly what is meant as a freelance contractor, as opposed to an agency worker. Given the average itinerant fruit picker is unlikely to own his own company, there is at least one simple and very clear separator. This would have greatly aided various other arguments such as who is caught by IR35. But it is not to be; instead of clarity we get muddle and greyness. A bit like St Vince, in fact. Which is something of a pity.

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

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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

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IR35 – an abomination in the eyes of the Lord?


Now the dust has settled on the OTS report, it’s been fascinating to see the various reactions to it. Most interestingly, nobody seems to have focused on the biggest potential recommendation, that IR35 be suspended with immediate effect. Which is a shame, really.

Most of the discussion obviously centres on the main recommendation, that PAYE and NICs get merged into a single tax. As I said last week, this is a far from trivial exercise, although the ultimate benefits in terms of simplicity and consistency would be enormous. Even if Mr Osborne does take this on, as many commentators seem to think he will, it will be years before it is achieved. More importantly, if the focus stays on the anomalies that are bound to arise during the transition, such as pensioners who don’t pay NICs in the first place, rather than on the real benefits then it will go nowhere. So let’s hope that just for once the commentators and pressure groups keep their eye on the real prize and, just for once, look at the long term picture.

So assuming Osborne does bite the bullet and make a bid for being a seriously reforming Chancellor (as opposed to one who simply wants to cut everything, which is how the opposition want to portray him and which really is a load of Balls), then what is the next OTS recommendation?

That’s right – stop IR35. Whoo hoo…

Needless to say, even doing that is not that simple. What happens to the cases currently being investigated? Are they simply stopped, leaving the worker hanging without a decision in case it is later reinstated, as may happen? Are they abandoned altogether, which seems a little unlikely? Or will they be allowed to continue to a conclusion, which is my guess since legal processes are fairly much unstoppable once invoked. About the only certainty is that nobody else would have a simple PAYE audit mutate into a five year, £50,000 court case.

Take out IR35 and would we then see a rush of incorporations as all those who say they use umbrellas because they can’t be bothered with the administrative overhead of their own company suddenly realise it isn’t actually that much of a problem and the extra income would really come in handy. That wouldn’t do the umbrella companies a lot of good either, especially with the Agency Workers Directive kicking off later this year.

In fact the only people to remain comparatively unaffected by it all are those like me who have their own companies, understand the rules who are trying to work as a business and always have done.

The “In Business” tests didn’t get a lot of attention, possibly because the OTS doesn’t really see adding an extra layer of administration as a simplification, even if it would greatly limit the number of cases HMRC would have to worry about.

And the third option, that HMRC’s administration of IR35 be greatly improved, was described by PCG as “risible”. Not because the idea of HMRC doing anything even vaguely resembling effective administration is seen as something of a forlorn hope (which it is, of course), but until HMRC are subject to a formal duty of care and subject to a full cost benefit analysis of the cases they bring, there is nothing to stop them pressing cases that they have little or no hope of winning, just because they can. They demand we do everything 100% correctly and attack us for the merest slip, but are totally exempt from any such constraint themselves.

We have to wait until the Budget to see what is going to happen of course, but PCG are to be congratulated for driving us to the position we now find ourselves in, that not only HMG are recognising that IR35 is an abomination in the eyes of the Lord, but that they may actually do something about it.

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

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Gold-plating of EU directives is to stop immediately


Shortly before Christmas, the Business Secretary Vince Cable, promised to help British firms compete better against their continental rivals, by cutting European red tape.

The Government plans to stop the “gold-plating” of EU directives in cases where implementation goes beyond the minimum standard decreed. This new policy will take immediate effect.

In future, the text of European directives will be written directly into British law and will mean that the UK’s interpretation of the law is not unfairly restricting British businesses and limited company contractors. Additionally, every five years ministers will review the European directive legislation and will consult with businesses on the application of the rules.

The ARC has welcomed the coalition’s move, saying it will help businesses in the UK compete fairly. Chairman Adrian Marlowe said that nobody has asked for favours, but by helping Britain compete, the way is set for greater employment and prosperity.

Copying EU directives directly into law without adding interpretations makes sense and this should ease the problems of actually implementing the regulations. EU legislation is not subject to open debates unlike UK led regulations. Legislation, such as the AWR, will be able to pass straight into law without parliament voting on it.

Marlowe explained that the Agency Workers Directive contains “gold-plating” that is not essential under the EU directive and this has put both recruiters and employers at a disadvantage.

Marlowe also pointed out that the use of agreements between social partners causes concern. A few organisations get disproportionate authority and if this device continues to be used he urges Mr. Cable to make sure the entire process is open and transparent.

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I am Not an Employee, I’m a Freelance


Good to see the Coalition coming good on their promise of reviewing IR35. The announcement of the creation of the Office for Tax Simplification was rapidly followed by the publishing of its Terms of Reference. This made really good reading since they contained a specific statement of IR35 as a prime target for their review.

Needless to say this has prompted an immediate flurry of speculation about how IR35 would be replaced with something more draconian. For example, the new head of the OTS, John Whiting, mentioned 80/20 when talking about their proposed plan of action, which some have immediately translated into meaning the OTS would resurrect the failed and discredited Australian idea that to be a real freelance, no more than 80% of your income should come from a single client. Heigh ho…

As I’ve said before, there is a real difficulty distinguishing between genuine one-man companies and those who use a Limited Company purely as an artificial tax avoidance vehicle. But however the OTS suggests we square that particular circle, I’m fairly sure the 80/20 rule will not be part of it.

Meanwhile this whole (and rather premature!) debate has prompted some other thoughts.

Key to any resolution to the IR35 question is defining a freelance worker. While the traditional model in UK economics defines everyone as either employer or employee, in reality there is a third category of “none of the above”. If that third way was properly enshrined as a working model, consider the many areas where things would become much clearer.

Firstly, there is the vexed question of business expenses. As we know, travel and subsistence expenses for a temporary workplace cease after two years. While this makes perfect sense for a permanent long-term employee, it is nonsense for someone like me who takes work wherever it may be found. Why should I personally be penalised if my company’s client base happens to be based in the same approximate geographical area?

Secondly ID checking and the right to work in the UK, while important, is the responsibility of the employer. My clients are not my employers; in fact most of my contracts go to great lengths to prove they are not. If we allow me to be an independent worker, that checking becomes unnecessary since my company can make the necessary declarations and accept legal responsibility for their accuracy.

Thirdly, liability for payment of taxes could go down to the individual and not, as at present under S44-47, up to the intermediary company (which in most cases would otherwise be the agency). That would step around a huge amount of contractual debate of who is an employee of whom, which incidentally would only help resolve the IR35 “problem”.

Finally there are a raft of current and future issues with the Agency Workers Directive and the Agency Regulations that would cease to be of any relevance. For example, we have to go through the nonsense of opting out of the Agency Regulations when, as any fool knows, the way this is routinely done means you are in fact opted in anyway.

And, looking a bit further over the horizon, it is clear that the EU has no concept of the UK model for the freelancer worker. If we can establish our legitimacy up front right now, we would avoid a whole new set of problems.

The UK Freelance is a hugely valuable factor in the UK economy. There are around 4.8 million of us. Why is it so hard to get that fact recognised in law?

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Preparing for the Agency Workers Directive


The plight of UK contractors, freelancers and temporary workers has once again come under the spotlight this week following the launch of the REC’s Agency Workers Directive (AWD) Toolkit.

Since the EU-inspired regulations were signed off in January this year there has been much speculation within the industry about the scope of the AWD. As things stand, umbrella company workers are thought to be captured by the regulations whereas those who are genuinely “in business on their own account” are not.

This would appear to suggest that contractors working outside of IR35 and through their own limited company will not be subject to the much critised ’12 week rule’. Many industry insiders however are yet to be fully convinced that this is indeed the case.

The REC is under no illusions about the potential impact of the AWD. According to the organisation, their new toolkit will assist recruiters to overcome the administrative, legal and practical challenges in a post AWR world.

A spokesperson from the REC said that the industry has reached an important milestone and the now was the time to sit up and pay attention to what is one of the most significant events ever to hit the industry. More information about AWR toolkit can be found by visiting the REC’s website.

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Taking a closer look at the main parties’ manifestos


With just over two weeks until the general election, leading contractor accountant Kate Cottrell takes a look at the main parties’ manifestos, and in particular any promises for contractors and IR35.

We have had a couple of weeks of side announcements from the main parties including numerous plans to cut IT projects, cut contracts, cut recruitment and to curb the use of consultants in the public sector. We have also seen “landmark commitments” to “review” IR35 but what do the main parties manifestos say?

Labour

Labour has of course given us a limited insight into their future plans with their budget last month which contained little for contractors. On 14 April they also published a “Tax Framework for Business” in which they have set out how they will work to understand and respond to the views of business. In their drive for a sustainable tax base they have 5 stated principles, competitiveness, fairness, minimising distortions, simplicity and stability and certainity. Of these principles perhaps stability and certainty could hold a promise for contractors and IR35.

However the document goes on to explain that this principle means they would avoid unnecessary changes to tax legislation and where a change is necessary they will try to adhere to a tax-policy making process. The document also clearly states that they will also explain their reasons if they cannot adhere to this process! Labour’s manfesto talks of “creating a shareholding society” along John Lewis lines by reviewing barriers and widening share ownership which is directed clearly at employees. Labour will also consider the construction industry again by extending the Gangmasters Licencing Authority to this sector. Finally Labour are committed to enacting the Agency Workers Directive in full. All in all little for contractors and no mention of IR35.

Liberal Democrat

There is more detail in this manifesto in terms of the figures but again little gain for contractors apart from the proposed increase in the tax threshold to 10K which would impact mainly low earners. The LD’s are calling for a level playing field for business with a promise to review regulations and red tape and in particular a committment to “one in one out” for new legislation and to consult on everything.

We must not forget that it was the liberal democrats who tabled an early day motion for the repeal of IR35 but I understand that many of those who signed and their researchers are considering this again in light of the significant deterrent effect of IR35 and the large sums currently generated from umbrella companies. A more worrying point in this manifesto is a committment to further new powers for HMRC to tackle tax avoidance and tax evasion. As many will know HMRC has been given unprecedented powers and penalty provisions under the current government and the suggestion of more to come is surprising.

Conservative

The Conservative’s manifesto is very business focused and if elected we will quickly see an emergency budget with the removal of the NIC increase. Commitments on small business rates, reductions in corporation tax, moving some of the unemployed to self-employed and cutting costs for bidding for government contracts are all mentioned, as is the introduction of a new Office of Tax Simplification. Apart from the removal of the NIC hike it seems that we will have to await the publication in the first budget of the Conservatives “5 Year Road Map” for timescales on all the other issues and in particular the new Simplification Office tasked with the job of reform.

The Conservatives also commit to giving the public the opprtunity to force the worst regulations to be repealed. The manifesto does not mention IR35 but a committment to review it was given in a side letter. However it seems likely that this will, if taken forward, be a job for the new Simplification Office so could be a long way off.

In summary we have lots of pledges to reform and review from all the parties. Whoever is elected any reforms will of course all come down to the state of the public finances which would suggest that there is a lot of pain to come. None of the manifestos mention IR35 and if we do eventually see lower tax rates and the repeal of IR35 then we can also be certain that contractors will be paying a lot more tax under some other initiative introduced under the banner of fairness and simplification.

Kate Cotterell is Managing Director of Bauer & Cotterell.
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Why I dislike this government quite so much…


So our Beloved Leader has finally allowed us an election. Good news on several fronts. I make no secret of my desire to see the end of the current Parliament in general and our sitting PM in particular. But before we all get drowned in claim and counter claim about who is best suited to lead us out of the crisis we find ourselves in, I thought I might just remind people why I, as a humble one-man-band contractor, dislike this government quite so much.

Firstly, the iniquitous IR35. Brought in by someone who refused to pay a legally imposed tax to address a problem that didn’t exist and so badly framed only a court could decide if it applied to you or not. So you buy insurances and pay for contract reviews and live in uncertainty, or you go use an umbrella and pay a load of taxes you almost certainly don’t actually owe. Meant to bring in £400m a year, it actually generates around £1.5m. Brilliant work chaps.

Then they killed off MSCs. Not a thing that bothered me, to be honest, but I know of people who were trading perfectly correctly through them who had to shift to a different model.

Then we had the Arctic case, trying to apply the clearly defined S660a legislation to a situation it was never meant to cover and which, in fact, was positively endorsed in the House (by a Tory chancellor as it happens…).

Then when they lost that one they immediately produced the fully-formed Family Business Tax (or Income Splitting, as they termed it). That has never actually gone away, but at least the lobbyists were able to demonstrate just how poorly thought out and generally unworkably ridiculous the whole idea was. So that never saw the light of day, thank God and the PCG. The latest one is the Agency Workers Directive, another piece of EU-inspired nonsense that has a genuine purpose at heart but once again is so badly enacted you still won’t know for certain if it applies to you.

And underpinning that catalogue on ineptitude is the constant failure to distinguish between avoidance and evasion (hint: only one of them is illegal, Gordon), the joyous embracing of selling our IT industry abroad by failing to manage the abuse of the ICT system, the wholly unacceptable retrospective change behind BN66 and a raft of smaller but equally rubbish rules and regulations that blight your working life.

So all in all, I hope never again to hear a dour Scots voice telling me all this grief is in the interests of fairness. It isn’t, it’s in the interests of a discredited socialist agenda that’s wrecked the country and cost me a lot of money for no benefit whatsoever.

So farewell, New Labour. Whoever or whatever replaces you, at least the only possible direction is upwards.

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New Year Resolutions?


It’s that time of the year when people herald in the New Year with plans to renew their gym membership, eat less and cut down on booze. These resolutions also apply to the world of contracting. Here’s what I mean.

Go on a diet

Our government needs to reduce red tape and ditch the complicated tax system. Will they? I doubt it against the current economic backdrop and with an election around the corner. It will also be interesting to read the Conservative manifesto on taxation – although I think, ironically, that this will offer slim pickings. We are getting an audience with the shadow chancellor, so watch this space; I may have more to report back on.

Get fit

We need the economy to be in better shape, but the world of contracting has remained robust in 2009. The flexible workforce has been instrumental in helping to keep the UK competitive as we power walked through the recession. But we still need a fitter and much trimmer economy. I just wish the UK government would do more to understand how contractors have contributed to the health of the nation and recognise this point. And in terms of membership issues, the EU social chapter that tries to impose conditions on countries needs to cater to each member’s diversity of employment and labour trends in order for these countries to remain economically healthy. I am pro protecting truly vulnerable workers, but the true nature of flexible employment needs to be understood.

Get competitive

Offshoring, outsourcing and flexible working are all here to stay. So quit complaining and start competing! Niche contractors always find good roles (and rates) and now more than ever we need to focus on better skills, better delivery and perhaps creating more connectivity to compete. Try and find some time and money to think about training and marketing.

Get advice

Invest in good advice. If your yoga teacher reckons he’ll have you in a lotus in the first half-hour of training you need better advice! I’ve lost count of the number of times I’ve heard a contractor bemoan bad tax advice from a cheap book keeping solution. Spend a little bit extra and get good counsel about your tax position, possible opportunities to invest and improve your finances. Use a specialist rather than a generalist.

I could go on and on, but if we could keep to some of the above then we stand a chance of succeeding. I think 2010 will be tough but not impossible. The strong will thrive. Right, I’m off for a beer and pie….

Rob Crossland is Managing Director of Parasol Group
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2010 – a year of change and opportunity for contractors?


Contractors may have breathed a sigh of relief following the pre-budget report having found little changed. However can any tax payer really expect to pay the same tax/NIC post general election?

Considering the state of the UK’s finances the answer has to be a resounding no. The electioneering has begun and we hear calls from one party for a £10K nil rate tax band, accusations from the current incumbents of a forthcoming class war but the emphasis from all three main parties is clearly on fairness.

IR35

Public campaigns for the repeal of IR35 have so far failed. If they had succeeded it would be unrealistic in the extreme to expect in its place a system where less or even the same tax/NIC is generated from those operating through limited companies.

The Agency Workers Directive (AWD) calls for a definition of the genuinely self-employed and suggests that those outside IR35 would also be outside the AWD. This new legislation presents a real opprtunity for end clients and agencies to understand and address the issues of employment status. We could at last see an end to engagers who want all of the controls over the freelancer as an “employer” but with none of the responsibilities that an employment relationship brings. The AWD in its current form also addresses the perceived unfairness with regard to employment rights for those inside IR35.

Umbrella Companies

Arguably expenses for Umbrella users were saved thanks to the Daily Telegraph! The future is the flexible workforce and there is still an important role for umbrella companies to play. HMRC has fired several warning shots regarding Umbrellas use of over- arching contracts of employment and it seems there are numerous ones out there that do not work. Returning to the issue of fairness and the fact that agency workers generally cannot claim expenses the Umbrella user may find him/herself in the same position as the PAYE agency worker.

Changes

Brace yourselves for a change of government, an emergency budget and more tax to pay.

Opportunities

New regulations bring opportunities for education and better understanding of employment status issues by all the parties in the contractual chain which is good news for Contractors.

In the meantime we still have IR35 and Umbrella expenses schemes and HMRC is very much out there using its new powers and spending its enormous budget on compliance work. 2010 is going to be a year for all contractors to take notice of the changes and the opportunities and consider their positions accordingly.

Kate Cotterell is Managing Director of Bauer & Cotterell.
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Will the Agency Workers Directive contain legal loopholes?


Following the consultation period on the draft Agency Workers Directive (AWD), the Trade Union Congress (TUC) has called on the Government to consider all potential legal loopholes when implementing the new regulations.

According to the TUC, the draft proposals on the AWD do not go far enough in protecting workers’ rights on issues such as pay, holiday and working hours. The TUC further suggests that their is a danger that certain employers will sidestep their responsibilities by rotating agency temps between different employers, or by shifting workers between jobs at the same workplace. This view is shared by several leading contractor accountants.

In a recent poll, the TUC found that thousands of UK agency workers face unfair treatment and abuse in the workplace while certain rouge employers are not providing adequate pay, working hours, and general terms & conditions. According to TUC general secretary Brendan Barber, the AWD must provide proper protection to UK agency workers which is why the final regulations should be well thought out.

Industry bodes have already voiced their concern over the potential use of bogus self-employment vechiles such as limited companies to avoid equal treatment rights. Earlier this month, The Association of Professional Staffing Companies (APSCo) rightly pointed out that the draft regulations currently propose that limited company contractors are excluded if they are working outside of IR35, but included if they are not. APSCo warns that if this issue is not properly addressed, it could have a serious consequence on the future of the interim worker in this country.

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Contractors given temporary relief from the Agency Workers Directive


With the delay of the Agency Workers Directive (AWD) until October 2011, there is at last some relief for contractors. Make no mistake, AWD as drafted would have a big impact on contractors given that agencies and end-clients would be forced into processes that would at best delay placements and at worse, remove some of the roles available.
But it’s only a temporary relief, October 2011 is fixed in stone but at least there is time to plan properly and get all our heads around it. The really ironic thing for umbrella contractors is that much of what AWD tries to do (equal rights with permanent employees) is already provided by businesses like Parasol. On the other hand some contractors don’t want the same rights as the “permie” but because Europe and UK Government can’t differentiate between true vulnerable workers and contractors then everyone is caught. I would still urge everyone to lobby the government to push the point around understanding the labour market in the 21st century as without continued focus everyone will be classed as “vulnerable”. Make no mistake, I am no advocate of exploiting workers and some of the previous practices are rightly condemned but we seem to be blindly lumping everyone together because Europe don’t “get” contracting and the UK Government are scared to define anything. I understand the last point to some degree, they will be concerned that sharp operators will find a loop-hole and that’s another reason why umbrellas (who mainly employ professional contractors) are caught specifically.  It did not make a world of difference to Parasol contractors as we have a very robust employment model and a true accountancy practice but of course, by association we get pulled in.
So business as usual for us all in a time when that does make sense for a change. Contractors can get the roles that are coming up, agencies can plan and end clients won’t be hassled for pay rates and conditions, well not yet anyway.
I have a long held belief that UK plc is stuck between two camps and never gets clarity as a result. As a member of the EU we are held to some of the social chapter practices that don’t work for our markets. We also try to be entrepreneurial yet quite often go too far with that too (banking anyone?). AWD is a good manifestation of that problem, socially driven with the desire to protect workers not getting rights (a good thing) versus some complicated carve outs to try and allow the UK to function (excluded if you work for less than 3 months on one client) for our more flexible approach to business.  So we are stuck between the two and guess who ends up paying?
A braver person may have produced a definition of worker and a framework to prevent abuse (that’s what we lobbied for).  That’s an opportunity missed in my opinion and AWD will loom in the background as a distraction we could all do without.

With the delay of the Agency Workers Directive (AWD) until October 2011, there is at last some relief for contractors. Make no mistake, AWD as drafted would have a big impact on contractors given that agencies and end-clients would be forced into processes that would at best delay placements and at worse, remove some of the roles available.

But it’s only a temporary relief, October 2011 is fixed in stone but at least there is time to plan properly and get all our heads around it. The really ironic thing for umbrella contractors is that much of what AWD tries to do (equal rights with permanent employees) is already provided by businesses like Parasol. On the other hand some contractors don’t want the same rights as the “permie” but because Europe and UK Government can’t differentiate between true vulnerable workers and contractors then everyone is caught.

I would still urge everyone to lobby the government to push the point around understanding the labour market in the 21st century as without continued focus everyone will be classed as “vulnerable”. Make no mistake, I am no advocate of exploiting workers and some of the previous practices are rightly condemned but we seem to be blindly lumping everyone together because Europe don’t “get” contracting and the UK Government are scared to define anything.

I understand the last point to some degree, they will be concerned that sharp operators will find a loop-hole and that’s another reason why umbrellas (who mainly employ professional contractors) are caught specifically.  It did not make a world of difference to Parasol contractors as we have a very robust employment model and a true accountancy practice but of course, by association we get pulled in.

So business as usual for us all in a time when that does make sense for a change. Contractors can get the roles that are coming up, agencies can plan and end clients won’t be hassled for pay rates and conditions, well not yet anyway.

I have a long held belief that UK plc is stuck between two camps and never gets clarity as a result. As a member of the EU we are held to some of the social chapter practices that don’t work for our markets. We also try to be entrepreneurial yet quite often go too far with that too (banking anyone?). AWD is a good manifestation of that problem, socially driven with the desire to protect workers not getting rights (a good thing) versus some complicated carve outs to try and allow the UK to function (excluded if you work for less than 3 months on one client) for our more flexible approach to business.  So we are stuck between the two and guess who ends up paying?

A braver person may have produced a definition of worker and a framework to prevent abuse (that’s what we lobbied for).  That’s an opportunity missed in my opinion and AWD will loom in the background as a distraction we could all do without.

Rob Crossland is the Managing Director of Parasol
© 2009 All rights reserved. Reproduction in whole or in part without permission is prohibited

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What all contractors should know about the agency workers directive


Many contractors have already heard about the proposed Agency Workers Directive (AWD), but not everyone truly understands how it will affect the contracting and recruitment markets in the UK.

Whlst attempting to establish the EU economy as the best in the world, the AWD’s objective is to create the most appropriate framework of employing temporary workers in the EU and to ensure that these individuals are not discriminated against.

Of all the countries in the EU, only the UK has such a well established recruitment marketplace, which is why approximately 1/3 of all EU agency workers are based here. In Italy, employment agencies were considered illegal until only very recently.

With consultations on-going until 18th October 2009, the Government is now studying the possible impact of the AWD on temporary agency work in the UK. The EU is expected to adopt the proposed directive by September next year, to be implemented into UK Law in two years time.

Impact on UK Contractors

So what does all this mean for UK freelance contractors? Well, there are several proposals currently in consideration, most of which have been included to provide temporary workers with the same (or at least similar) rights and conditions to permanent workers. Recruiters are being asked to scrap Temp-to-perm transfer fees and end clients will need to inform agency workers of available permanent positions.

According to the proposals, member states may refuse the equal treatment of temporary workers but only in the following circumstances:

* temps are paid between assignments (this is rare in UK);
* they are covered by collective agreements (this is also very rare);
* the assignment is for less than 6 weeks (the Government is pushing for a 12-month limit whilst some MEPs believe that there should be no limit at all)

The DTI predicts total costs of between £80 and £194 million to recruitment agencies and the cost for clients between £239 and £387 million. Costs to payroll and umbrella companies have not been estimated. According to some, the DTI’s Regulatory Impact Assessment lacks any objective data on temporary work in the UK and the EU – its quoted figures are therefore questionable.

Since the AWD requires equal pay and benefits for temps, it is believed that temporary work on the whole in the UK could decrease considerably. The UK government contests that the AWD must not include workers pay since Article 137 of the EC Treaty clearly states that, ‘the provisions of this article shall not apply to pay’. The inclusion of pay would mean that the payroll company (umbrella) or recruitment agency must obtain detailed information on a client’s pay standards in order to ensure that temps are not paid less.

Conclusion

The proposed AWD, once adopted, could greatly impact the freelance recruitment industry in the UK and contractors should prepare for the possible consequences. We recommend that you write to your MP and MEP to explain and give examples of how much this proposed directive could cost you.

© 2009 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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