Considerations for Opting out of the Regulations
*•The Regulations are primarily designed to protect vulnerable temporary workers,
e.g. low paid workers in the hotel and catering industry who maybe under duress to
accept unscrupulous practices by employment agencies.
There is an argument that seeking protection under the EAA Regulations, which are
intended to protect temporary workers in general, is damaging to the argument that
the contractor is operating as a 'business on their own account,' i.e. that they can
take care of their own business affairs without the need for unwanted government
Freelance contractors are also extremely conscious of the need to demonstrate that
they are operating on a true business-to-business basis with the agency. This is
important in the context of the IR35 legislation.
Limited Company contractors are often highly skilled, highly paid and operate under a
business to business contract with their agency and therefore do not see themselves
requiring the protection given to PAYE temporary workers.
Opting out provides a discernible method for a limited company contractor to distance
their supply of professional services, from that of doing temporary work in general.
Limited Company contractors that opt out of the EAA Regulations, are not required to
comply with certain procedural requirements of the Regulations i.e. provide evidence
of qualifications, training and experience that is stipulated by the client as necessary
for the assignment.
Considerations for remaining under the Regulations
Agencies are bound by the EAA Regulations to confirm details of all of qualifications,
experience and training, that the client considers necessary for the position to be
filled. In reality this means the contractor having to provide evidence of work history,
educational and training certificates required for the position. This process is likely
to delay setting up interviews, since all the information needs to be confirmed before
the introduction to the client. It may therefore lead to another candidate securing a
position instead of an opted in contractor.
Agencies have to give an undertaking to the contractor, that it will pay the contractor
for all hours/days worked. We do not see this as a real benefit since the majority
of contractors receive payment for all hours/days worked in any case, since they
produce work of a high and professional quality. This Regulation is designed to
protect those contractors who may not receive fees as a result of unsatisfactory work.
Agencies will need to verify the hours worked by the contractor, if for any reason
the contractor is unable to provide an authorised timesheet. This will mean that
the agency will need to contact the contractor’s line manager in order to establish
whether the hours the contractor claims to have worked, were actually worked. This
will inevitably lead to delays in paying the invoices of contractors.
They will be free to work for the client directly (or indirectly), without any restriction by
the agency. However in practice the agency will have agreed a transfer clause in its
contract with their client, which will charge a fee to the client if they employ or engage
a contractor up to a period of 8 weeks from the end of an assignment. The contractor
would therefore need to find alternative work (or take a holiday) for 8 weeks, if the
client is not to pay a fee to the agency.