Tag Archive | "agency workers regulations"

It’s been a difficult year for many but not a disastrous one, overall.


So this is Christmas, and what have we done? Well, speaking personally, quite a lot in one way and another. But it has been a funny old year in some ways.

Last December I was being optimistic about the Coalition making significant changes in various things. I was cautious about IR35, thinking they wouldn’t be a position to repeal it out of hand, but I didn’t expect young Osborne to come out in the Budget with the statement that he needs to keep IR35 to prevent abuses of the system. Which is kind of where we came in.

He did set up the Office of Tax Simplification though, and from there has sprung the IR35 Forum. The former has turned into something of a toothless wonder, getting ever more bogged down in detail. The more cynical among us might be tempted to suggest that this is because a lot of the parties around that table have something of a commercial interest in keeping IR35 exactly where it is, but that would be an unworthy thought. Wouldn’t it….

The IR35 Forum is still to produce anything but it looks like it can at least claim it has a direction and an intent that its parent body is sadly lacking. However we won’t really know much more until the next Budget.

In reality the best we can hope for is that IR35 remains as is, but Hector is rather more competent at judging who to stick under its microscope.

The Agency Workers Regulations arrived and caught all the agencies by surprise – hey, they only had a year’s warning, so what do you expect – leading to a flurry of letters demanding that you declare yourself outside its scope. Tricky, when anyone is potentially inside its scope and we have no case law to work with. Plus can change as they say.

The Cabinet Office was presented with a major paper on Security Clearance following a detailed, wide-ranging research project led by PCG, who highlighted what’s wrong with the system and, perhaps more importantly, what damage is being done. And even some options for how to fix it. This has been very well received and personally I am delighted, having been pressing for this kind of thing to happen for around eight years now.

Several IR35 appeals were completed, all but one of which were found to be outside, so reinforcing the status quo if not setting any new precedents. The other was the one I wrote about just last week, where the guy was found to be outside and then outside, all in the same contract. I think we’ll park that one in the folder marked “Say What?” and just forget about it.

The Market: now that’s interesting. The financial sector suffered an almost universal 10% rate cut during the year, with a few going even further. The rest of the world, however, seems to be plodding along at the same level. Lots of contractor layoffs and enforced holidays as well – again, only in finance. There are nowhere near as many jobs as they were, and rather more people chasing them, but you have to say that, taken as a whole, things aren’t as bad as some were predicting. The job losses seem to have been in the permanent market, so you have to conclude that UK PLC is sticking with easily-disposable temporary resources until they can see the light at the end of the tunnel. A light which is most likely to be a train coming the other way, if the pundits are to be believed.

And best news of all – our favourite MP and failed tax evader, the fragrant Ms Primarolo, is standing down at the next election.

So it’s been a difficult year for many but not a disastrous one, overall. Speaking for myself I’ve been gainfully employed most of the year, and am hopeful of that continuing a while longer. I’m looking forward to a week off eating and drinking far too much – and not having to face a sheet of blank A4 on Thursday night – before having to face the 7:15 from Bristol in the bleak midwinter again.

Have a good one.

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.

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Time to change the world of recruitment methinks


You have to laugh, you know. I never cease to be amazed at the number of posts I see about contractors claiming all sorts of problems with, variously, notice periods (don’t need them, as I’ve said before), IR35-safe contracts (fine as long as they represent reality), the AWR (don’t start me on that one again) and the infamous opt out from the Agency Regulations (opt out if you can but it makes little real difference). Plus, of course, the running complaint about the agency’s percentage of the contractor’s rate: except, of course, as ony fule kno they don’t get the percentage, the contractor does.

However there is a common theme to these various complaints. The agency.

We have to be fair to the poor agents themselves though. Increasingly they are run by accountants targeting sales figures and maximising margin. Little details like serving both sides in the contract have zero relevance to their business model. The individual agents are given achievement targets and so have no time for the niceties if they want to pay the mortgage. And of course it is much more cost effective to employ minimally experienced drones to handle the phones and use software to do the pattern matching between CV and job description.

All of which is fine if you’re dealing with a commodity market like general development, operations and service management roles. But it’s a serious problem for all sides if you are a little more senior, or have niche skills in some area or another. Or even if, like many, you aren’t a specialist in any given field, just a good, solid all-rounder who can make a success of any contract they’re given.

In effect you start from scratch every time you need a new contract. No matter how good you are, you still have to get through the auto-pilot box-ticking recruitment business we have these days. The one that says the agent gets a new role then stands there waving a piece of paper in the air to see who might be interested: usually several hundred, often hopelessly under qualified people on average. The signal to noise ratio in recruitment is actually appalling. How much cleaner if he had the resource to hand when the role comes in.

So how do we change the paradigm (see, I can do business speak as well…). The answer is surprisingly obvious.

The contractor pays the agent, not the client. Shock, horror…

Seriously, it would work. I have many skills but selling isn’t one of them, nor is cold-calling to find work (actually that’s just cowardice, but the result is the same). So why not outsource that part of the business to someone who does it for a living? The agent goes to the client with a zero margin deal. The contract would have to be B2B and, legally, you would have to be opted out of the Agency Regulations, both of which would appear to be good ideas. You know, solid in business indicators, no IR35, no AWR, no secret upper contracts…

There would be no hint of you being anyone’s employee either, since you’re at the top of the contract, not the bottom.

The agent would have to know who you are, what you can do, what you are worth and what your history is. He would be able to sell you actively and be incentivised to find you repeat business, since that’s where his margin comes from. He could specialise in given areas and build up a stable of people with the relevant skills, or he could be the one to fill the awkward jobs from his knowledge of his customers.

Best of all, you set the gross and the agent gets the percentage.

So what’s not to like? If you’re big enough and strong enough to build and justify a working reputation, and be able to be sold into an open market, why not go for it? I’d happily pay for that level of access and support, which has to be better than fighting your way to the top of some disinterested minion’s in tray to get noticed.

All we want is a couple of good agencies with the courage to bite the bullet and disregard the way they’ve always done it.

Ah. That might be a problem. Anyone know any brave, risk-taking agency FDs…?

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.

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Contractor accountants feel burdened down by red tape


The British Chamber of Commerce claims that limited company contractor accountants and other small business owners are being weighed down by the burden of red tape.

80% of small businesses have now had to resort to external expertise to help them comply with the UK’s complex employment regulations.

The BCC’s director-general, John Longworth, said that although the coalition is improving the tribunal system, the implementation of Agency Workers Regulations, along with changes to pensions and parental rights present additional bureaucracy for business owners to contend with. He went on to explain that more jobs will be created if the employment market is flexible and the government should be reducing red tape not adding to it.

The government is considered changing reporting requirements for SMEs that could save them millions in accountancy fees.

Under the proposals, small businesses will be able to decide whether they wish to have their accounts audited. The minister for corporate governance, Edward Davey, said that many companies find audit valuable but as it costs around £10,000 to perform, removing the obligation would help them, and the economy, grow.

In order to qualify for the audit exemption, small businesses would need to meet two out of the following three criteria. Their turnover must not exceed £5.6 million, their balance sheet must be under £3.26 million and they must employ no more than 50 staff. The government has estimated this proposal could save small businesses £206 million per year.

Furthermore, the coalition intends to exempt the majority of subsidiary companies from a mandatory audit providing their debts are guaranteed by the parent company. This move would save a further £406 million every year.

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Hey, look at what we just did. We killed off IR35!


I thought it worth returning to the Agency Workers Regulations again, if only because I was ever so slightly amused by the reactions of certain agencies to them. With their industry’s usual instant and carefully controlled grasp of the subject, this week contractors started getting emails and letters from some agencies about how to manage the AWR. After the act had taken effect and therefore after the point at which you should react to it for an existing engagement. Genius, isn’t it?

Anyway, as is the way of such things, the letters are asking unanswerable questions.

The first one is “Do you work through a Limited Company or an Umbrella?”. Excuse me, but why do you have to ask? You have the contract in your filing system, along with the payment terms and the pointless fourteen pieces of ID. Don’t you know who you are dealing with? Please don’t tell me you weren’t even faintly interested in the company with whom you signed the contract. Silly old me thought you were dealing with MyCo when clearly you are only interested in dealing with me personally. OK, so that explains a lot, doesn’t it? Dropped the mask ever so slightly there, Mr Agent.

Secondly, “Do you consider yourself to be in business?”. Cue raucous laughter. I have signed a contract with you in my capacity as the Director of a UK Limited Company. A contract in which there are several clauses establishing that there is no employee-like relationship intended, which directs you to pay money into a business bank account and which charges you VAT. Does that not give you a slight hint that I’m trying very hard to be a business and not a temp from Office Angels?

Finally, “Do you consider you are operating inside or outside of IR35?”. Now you really are taking the Michael. We’re using your contract. You set up the deal with the end client, you know the requirement, you know what’s in your contract with them, and you understand how the client views the relationship between me and them. So why ask me? If I am inside IR35, it’s because you put me there, not the other way round.

Ok, so the poor dears are only trying to keep their masters happy and, as usual, de-risk everything as far as they can. Since you can’t actually opt out of the AWR anyway it’s all rather pointless, but if it makes them happy. Although there may be a different slant on this.

If the agencies, on behalf of their clients – who, we must remember, are actually those stout and highly aware souls in the Human Remains department – are concerned about the people they supply being in the scope of the AWR and so able to claim all these interesting extra benefits like holidays, there is a very simple way to prevent it. If you’re in business, you’re out of scope. It says so in the AWR itself.

So, Mr Agent, let’s make sure I am genuinely in business, as best we can, so the AWR can be ignored. This means that firstly you stop the pretence that you have this vast pool of experts at your disposal and you just send a couple of the most relevant over for the client to look at. Secondly that the client will exercise no direction and control over how the work is to be performed, beyond that minimum necessary that all workers will need to follow. And finally we drop all this pseudo-employee-with-multiple-exclusions contractual nonsense and start using simple business-to-business contracts. You know, something along the lines of “YourCo will supply these skills for this period to deliver this thing for which we will pay you this amount of money, conveniently broken down into weekly payments. The End”. It really could be that simple.

Hey, look at what we just did. We killed off IR35 as well. Gosh…

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.

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AWR – everyone ready for the end of the world?


It’s happening on Saturday and no, I don’t mean Scotland beating England by eight points. Although that would be fun for us Welsh…

No, Saturday is the day the eagerly anticipated Agency Workers Regulations come into force. And for such a significant event – and not just significant in our little world of contracting but in its potential impact on the UK economy and businesses – it all seems remarkably low key. And I find that both surprising and just a shade encouraging.

Of course it could be because everyone understands the new world and have prepared accordingly. Well not us Limited Company contractors of course, since we are out of scope so don’t have to do anything. This didn’t stop one poor soul asking questions about how he could persuade his agency that he was actually in scope. God knows why he thought that might be a good idea. Of course, he may simply be winding us all up – very occasionally that seems to happen on the internet, you know – and for his sake I hope that’s the case.

And, needless to say, there have been questions about does it really, really apply because of the ominous “genuinely in business” caveat the BIS or DBERR or whoever they are decided to add in for the fun of it. To which the answer is who knows, until it goes to court. Which I suspect it won’t, but you never know.

That reminds me of one of the better ideas I heard over the weekend. A group of us were pondering the work of the OTS (remember them? They’re still going you know) and how they could better focus their efforts. OK, so perhaps some of us should get out more, or perhaps drink less, but we found it worthy of discussion. The suggestion was made that the OTS could very usefully start with the various tax laws that have required a court case or two in order to figure out just what the hell the real rules are. Still, I digress…

So clearly the umbrellas and the agencies are well prepared, to the extent that I’ve heard of one agency that was trying to get its contractors to move to the right vehicle – PAYE through an agency, umbrella or limited Company – depending on their rates. Which is slightly deranged in one way but you can see the logic of it. So well done all.

But it does beg an interesting question. Why?

I mean, why is everyone so well prepared? Previous changes of similar magnitude – stopping MSCs, killing off some of the more imaginative offshore schemes, the Arctic Systems case, even IR35 itself – sort of burst upon a world that wasn’t really ready for them. That doesn’t seem to happen any more.

And that’s down to the wonderful Law of Unintended Consequences. In 1999, when the well-known failed tax-evader Ms Primarola introduced IR35, the aim was to punish us uppity freelancers by smacking us in the pocket. After all, given the recently released Freedom of Information answer that showed how pitifully ineffective IR35 has been financially, it clearly wasn’t done for the money. Or very well, come to that. But what it did do was galvanise a bunch of us uppity freelancers to fight back. And now, ten years on, HMG is not only listening to what we say, they are asking us what we think before they do it. Doesn’t mean they have the brains to listen, mind – else why do we have the AWR in its current foggy form – but at least we get the chance to publicise and explain things well ahead of their implementation. Which has to be a good thing.

So hopefully the AWR will do what it’s meant to do and protect the vulnerable and leave those who don’t need that level of care well alone. And we won’t get any more nasty surprises.

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.

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Figures on IR35 DO exist. So who’s kidding who?


As well as being technically proficient, independently minded and a bit intolerant of rigid work patterns, we’re also a tolerant bunch, us contractors. You kind of get used to having to dig out the truth from the often intentional obfuscation you get from the agencies, the client, the civil service and a host of other places. And you get to recognise some universal truths.

“Cyclists can ride safely on footpaths”. Yeah right…

“All contractors are very well paid”. Well we aren’t exactly running on empty, but we are usually pretty good at what we do, and command a decent rate accordingly. But the average rate for IT contractors as a whole is around £40 a hour these days,which is near as damn it the same net take home as a permanent employee on £40,000 a year; good but not exceptional.

“We require you to opt out of the Agency Regulations”. No you don’t. For one thing it’s nothing to do with you, Mr Agent. It’s not my problem if you’ve agreed a contract with the client that is incompatible with the requirements of an Opted-In contract for me. Since 95% of all Opt Outs aren’t legally correct, from what I’ve seen, why not work on the assumption that everyone is opted in? Ah, of course, then you wouldn’t be able to claim that the workers you supply are your own dedicated resources, would you?

“Opting In is highly beneficial”. Well, is it? The two key gains are guaranteed payment and a time limit on handcuff clauses. The former may have a superficial appeal, but if the agency’s not got any money they aren’t going to pay you anyway. The latter looks nice, but there will be the upper contract between agency and client that almost certainly stops them taking you on for at least as long as the period in your own contract. So where’s the handcuff limitation protection then?

“Retain 85% of your gross with our compliant solution”. Yeah, right. You do until the scheme gets legislated out of existence, the scheme owners do a runner or you discover the scheme doesn’t actually work in the first place. Then again Hector has recently given up trying to shut down some of these schemes because they can’t safely separate out those who should genuinely use them, like pension funds, and those who are taking advantage. Although that won’t stop them trying.

“We need to retain IR35”. Ah, now, hang on a minute. That was Osborne’s position in the last budget, when for a while we thought we had proven that IR35 was not only damaging and spiteful, it wasn’t actually earning any money for HMRC. The case was slightly hampered by the repeated assertion that there are no figures specifically covering IR35 within the ledgers of the Treasury. So we kind of accepted Osborne’s assertion that he needed it to dissuade Friday-to-Monday converts. (This despite one of the more obvious cases being Mr Hartnett, ex permanent Head of HMRC, now freelance Acting Head of HMRC. Didn’t even have to empty his waste bin). And the implicit assertion that since he wasn’t keeping any measure that wasn’t cost-effective, then IR35 was paying its way.

Then, all of a sudden, PCG gets a very interesting answer to an FIO request. It seems those figures do exist. What’s more, they are pretty damning: total case prosecuted over the last five years? Three hundred and twenty two. That’s slightly over one a week. Total revenue gained as a result? Five million, four hundred and forty two thousand, two hundred and ninety nine pounds. A shade over a million a year. Or just under seventeen thousand per case, assuming all were successful, which they almost certainly weren’t. Doesn’t exactly go very far against the one trillion government shortfall, does it…

Ok, so this is interesting. We have been told more than once that no figures on IR35 were being kept. You can even find that in Hansard. Now, suddenly, they have been. Most odd. So who’s kidding who, Mr Osborne?

And who in the previous administration was responsible for the earlier statements. I think we need to be told.

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.

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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

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

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If you want to freelance then come on in. But make sure you’re good enough first.


I got involved in a fairly interesting little debate recently: when is it a good idea to encourage people to compete for your own market? This is not quite as silly a question as it sounds. The government has already stated that it sees a flexible workforce as a key driver to our economic growth and is looking at encouraging people to build their own businesses if they want to do so.

OK, so the latest jobless figures, the rather depressing statistic that most newly created jobs aren’t going to UK residents and growth is still something of a twinkle in Osborne’s eye might seem to indicate that we have bigger problems to solve. Nevertheless, it’s always good to know that The Powers That Be think that what you do is of value.

But this leaves something of a dilemma. Especially for the PCG who are, as we all know, the only real voice speaking up for the freelance workforce. Quite rightly, they are aiming to ensure that if someone wants to take up the freelance banner, they have all the information they need to make a success of it.

Sadly, that also means pointing out the downsides. Which are considerable.

Firstly we still have IR35 and, inherent in that particular stupidity, the feeling that HMRC and, to a lesser but still significant extent the Treasury, still think that we are doing what we do to step around paying taxes. Which we aren’t, of course, but let’s not go over that again. That attitude manifests itself in many ways: the AWR would be a lot less of an issue if it had been drafted specifically to exclude incorporated workers, for example. To any logical mind, career freelancers are not in scope of the AWR and never should be, but still there is that “genuinely in business” caveat, as I may have mentioned in the past, so clearly HMRC still don’t really understand why we do what we do.

Anyway, leaving that well-trodden path to one side, it should be obvious, but often isn’t, that the other thing a freelancer needs is something to sell. After all, you are selling your skills and expertise, whether you’re building websites for local businesses, doing safety audits for nuclear power plants or running hundred million pound projects. That means that you need to have a fair bit of experience and expertise to sell on the open market. And that means that freelancing might be a valid career choice but, like boxing, you have to put in the roadwork first.

Of course there are always exceptions: I know of people who have never held down a “real” job and went straight from college to freelance, either by being very clever or very lucky. Or both.

So freelancing is a career step, but it has to be one that comes a little later in life, when you have learned enough, not only about your own subject but about business in general. It’s like skydiving, where stepping out of a perfectly serviceable airplane is a hopelessly stupid thing to do – until you do it and immediately want to do it again and again…

So, going back to the original point, perhaps the line should be not to encourage people to turn freelance, but to make sure they know that they need three things first – expertise, experience, and understanding. The first two are up to you but PCG are there with the third, in spades.

So the real message is if you want to freelance then come on in and we’ll do what we can to help out. But make sure you’re good enough first.

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.

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One day, sanity will prevail. But I suspect I’ll have retired by then.


An interesting idea was floated this week on one of the websites I haunt. Someone was getting just a little exasperated at the identity proving process we all suffer these days, and rather than drive 50 miles to an agency’s offices to show them his passport was wondering if having a Skype video conference with the agent while holding his passport would suffice.

General response was along the lines of nice idea, but these are agencies we’re dealing with so probably not. It’s not that we have any objections to proving we are who we say we are; it is to everyone’s benefit, after all. But the whole thing is getting just a little surreal.

Start with the passport thing. What everyone fails to remember is that a passport is only proof of identity if you are the one holding it. Copies, be they full colour images, redacted black and white scans, video image, even with you in the frame – none of these are proof of anything beyond your skills with a digital camera. You have to be there, holding it, at which point the other guy can take a copy of the photo page – nothing else just that page – for their own records.

And there’s another issue. The more peripatetic contractors – like me, for instance – go through this farce several times a year. Just how safe are all these copies of a Crown documents, I wonder? And how many of them are deleted once they are no longer needed?

And given the quality of most of my communications from agencies, just how accurate are the supporting records anyway? We will never know…

The real irritation, though, is that the whole exercise is totally unnecessary. And, as usual, we have to look to those bastions of professionalism and awareness, the agencies and the Human Remains Resources teams.

Because HR are usually in the loop for hiring contractors, they only think of them as pseudo-employees. OK, that’s an old argument that bores even me, but it’s still true. Therefore the master contract the agency has with the end client’s HR team is framed in terms of employment law. This, among other things, lays fearful penalties on clients who don’t ID check their employees.

Agencies, being at the higher end of the risk averseness scale, take great care not to offend. Hence they go to great lengths to ensure everyone they touch is checked. Except I am not an employee of anyone, I am an independent supplier. I’ve checked the people I send out to work for me and am more than willing to assert that I know who they are and that they are allowed to be here. And take any penalties you care to throw at me if I’m wrong. And since I’m not the agency’s employee – much as they like to pretend we are – and certainly not the client’s, there is no legal obligation to ID check me all over again.

All that has to happen is for agencies to have two contracts with their clients: one for employees, one for freelancers. Do that and not only do a lot of contractual arguments go away – along with 90% of the threat of IR35 and the AWR of course – but they save themselves hundreds of pointless man hours a year which, you might think, would appeal to the bean counters who run most agencies these days.

But far too simple a solution will never catch on. Especially if nobody triers to sell it.

And just to close, how about this for idiocy. One guy was asked for his NI number as well as his passport and “other documentary proof of address” to get a building pass. NI numbers aren’t a proof of anything, as the Home Office is at pains to point out. For one thing, while the numbers are unique they may have been given to, or used by, more than one person. So not really a lot of good to anyone as a proof of anything.

One day, sanity will prevail. I suspect I’ll have retired by then.

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: The Usual Suspects by Dylan Parker

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Am I in scope or not? Nope, no idea…


I‘m spending quite a lot of time these days sitting on the train between home and work. It’s not enough time to do the Times crossword, nor to dig out the laptop and do half a day’s work. Even if it were the “aircraft-style seating” is exactly that, too cramped to allow you to do anything apart from sit and stare out of the window.

Doing that, you can’t help but notice the huge amount of hardware that is spread around the edges of our railway system. There are boxes of all sizes, some with arrays of cabling, some seemingly freestanding. There are odd little plaques on station platforms next to the track with sliders on that serve no obvious purpose. Some boxes are labelled but many are not. And all this on top of all the signals and points and speed limit signs and so on. you expect to see anyway.

And all this complexity so you can get on a train, be moved though a series of connections and arrive within two feet of where you got off yesterday. In other words, that complex infrastructure doesn’t impact on you in the slightest; you can get to where you’re going without having to think about it at all.

So what a shame that same approach doesn’t apply to legislation

I’ve been looking at two different set of documents recently, the clarification of the Agency Workers Regulations and some of the material around the latest position on ICTs. These are complex subjects, admittedly, but in essence the aim of the documentation is to allow you to determine to what extent the relevant legislation affects you personally. And I think both have failed in that aim.

The AWR guidance, apart from containing more typos and grammatical errors than I’ve seen in a hundred other HMG papers combined, is bafflingly opaque on perhaps its most fundamental question: am I as a freelance with my own company in scope of these regulations or not? Nope, no idea…

The reason, apparently, is because the authors want to be able to exclude artificial avoidance measures taken by the unscrupulous. They do this by including lots of fuzzy wording that’s open to interpretation. So to pursue the railway analogy, the points may be set to take you to Wales, but you may still end up in Cornwall. Why, nobody knows.

It’s the same with ICTs. The criteria are clearly stated: for example, work here for up to 12 months and you have to be paid £24,000 a year in salary. Except they haven’t defined “salary”, they haven’t defined what allowances go to make up that salary and some of their attempted clarifications are actually mutually exclusive.

Now these documents have been written by clever, educated people who have a solid grasp of the matter in hand. You have to conclude that the ambiguities in the documents are deliberate. You may accept that this is to minimise the risk of avoidance of the rules, but I’m afraid I don’t. As I said to my previous MP when debating the Arctic case, the best way to avoid people breaking the rules is the make the rules binary. You can’t really apply uncertainty theory to a set of points and expect to end up on the right track.

All in all, it’s a hell of a way to run a railway.

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: Fishers of people by LivingOS

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Accept this one thing and the AWD ceases to have any meaning


I started a new contract this week, having had rather too long a break from real work. And not a moment too soon, to be honest. Apart from having an income stream again, it’s a lot more fun talking to intelligent people about real problems instead of chatting to the dog about where we should go walkies today. Not that he ever answers me, beyond a slightly lopsided grin and a frantic tail wagging session.

Which is rather how I feel about certain agencies over the last week or so.

Perhaps the stress of having to get up in the morning and go somewhere is getting to me, but I am getting increasingly irritated by the flood of emails from assorted agencies offering me work that is nothing to do with my CV. They obviously have my CV, or some version of it, since they get the name and email address right almost every time (apparently I am a Mr Wells according to one recent email). But hey, does that CV imply that I really can’t wait to go be a permanent change manager in Geneva for twelve months? Or sit on a help desk in Warrington on £20 an hour? (Gosh. Be still my beating heart…). Still, just like the dog, you have to pretend they understand what you’re telling them or run screaming in despair.

And that is why I am seriously worried about the upcoming Agency Workers Regulations.

PCG and others seem fairly confident that the regulations, which are aimed at ensuring temporary workers get the same protections as permanent staff after a short while, won’t apply to genuine contractors working through their own Limited Companies. While that may well be the case, I have a horrible feeling that the agencies won’t quite grasp the point. An industry that routinely confuses a senior Service Delivery Manager and sometime Head of IT with a Helpdesk worker in Warrington is really going to struggle with the concept that not everyone they place in a job wants to be protected.

Which means that rather than move the Agency/Contractor contract more towards a genuine business-to-business one, which would establish the true nature of the relationship with the end client, they will be telling everyone that you need to have even more draconian clauses in the contracts to reinforce that point that the contractor is not an employee of theirs, or the agencies, or anyone else. Honest. Cross my heart…

Which really is the wrong way to go.

After all, the more you try and nail the myth that someone is not an employee, the more HMRC is going to think you have something to hide. All those interlocking clauses about no rights to be implied and mutuality is not assured must be hiding something or why have them?

And anyway, I am employed by someone, in all meaningful senses; there’s this company that I work through that supplies all I need in the way of income and sick pay and holidays and pensions funding and the rest in return for me hauling myself over to Cardiff or wherever and doing my thing. OK, so I own it, but it is a separate legal “person” and operates totally in accordance with a whole pile of relevant statutes. Accept that it exists, and has a real purpose, and all this Agency Worker nonsense, not to mention IR35 itself, suddenly ceases to have any meaning.

If only someone could tell the agencies that…

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: No entry for big-haired cleaning ladies by lorentey

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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?

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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