Staying in the same public sector contract after April 2017

[jamesbrown]

I'm currently working with a staffing agency (mostly provide temp staff into the NHS) and while they're concerned about what will occur no one is thinking "what will the contractors do?"

Just had a conversation, and they hadn't even considered it...

Question:
They employ and pay the contractor (mixture of umbrella, limited and PAYE) and then bill the NHS. Is it that any payment to a contractor after March 2017 must be PAYE, irrelevant when the contractor billed the agency or just work performed after March 2017?

And, when the agency invoices the NHS, does the agency have to ensure that all invoices billed after March 2017 are 'paid' at PAYE or just when the work is performed after March 2017?

On your specific technical question, the draft ITEPA is quite clear that it applies to payments made after this date, which could (almost certainly will, for existing contracts) include work completed before this date. There is a questionmark over which of the payments is the withholdable payment (PS > agent or agent > PSC), but it's definitely based on payment dates and not on work completion dates.

[BoredBloke]

This was taken from a piece on the front page relating to the pay cap in some parts of the NHS

Rubbish NHS Pay

>>>>>>>>>>>>>>>>>>
Currently sought-after IT contracts/ temporary IT assignments with the cap in place, include:
• User Acceptance Testers -- now paying between £163 to £192 per day (was £250 - £300 per day)
• Project Managers -- now paying £163 to £200 per day (was £250 to £300 per day).
• Senior Business Intelligence specialists -- now paying £224 to £264 per day (was £300 to £325 per day).
• IT Trainers -- now paying £130 to £150 per day (was £250 to £300 per day this time last year).

The above are real-world examples taken from some of our most recent placements. They reflect the willingness of many of our contractors to accept a lower rate in exchange for stability and longevity of contract working in the NHS.

Many of the IT specialists we place know they can still earn much more in the commercial sector, but they also recognise that with the NHS you are contributing to building a better health service, and a richer experience for patients, nationwide. It is our belief that despite the pay cap, a NHS IT contract can still be very satisfying. Many contractors we place agree, but sometimes only to the extent that they use a temporary contract as a stepping stone to an offer of permanent employment where, as yet, no such cap on pay is in force.

<<<<<<<<<<<<<<<<<<


This sounds very much like the guy trying his hardest to convince contractors to work for the abysmal rates on offer based on the fact that you'll be there for a long time - all wrapped up in that nice wooly feeling that you are doing something for the greater good. So reduced pay, higher tax take, still excluded from the welfare state when you're out of work. But the rates do factor in the lack of holiday pay (hence the higher pay than the permie equivalent) but seem to miss the fact that per contractor is and easy to hire/fire skilled resource, doesn't get/need training and is expected to hit the ground running. It also fails to take into account that the permie they are comparing the contractor to has a gold plated public sector pension that the rest of us are funding...the contractor included!

Exactly what calibre of contractor they are expecting to get for those rates is pretty obvious - the bottom rung of the PM rate is £163 a day or 37.5k a year based on a 46 week year, before deductions and with no bench time.

[SussexSeagull]

This was taken from a piece on the front page relating to the pay cap in some parts of the NHS

Rubbish NHS Pay

>>>>>>>>>>>>>>>>>>
Currently sought-after IT contracts/ temporary IT assignments with the cap in place, include:
• User Acceptance Testers -- now paying between £163 to £192 per day (was £250 - £300 per day)
• Project Managers -- now paying £163 to £200 per day (was £250 to £300 per day).
• Senior Business Intelligence specialists -- now paying £224 to £264 per day (was £300 to £325 per day).
• IT Trainers -- now paying £130 to £150 per day (was £250 to £300 per day this time last year).

The above are real-world examples taken from some of our most recent placements. They reflect the willingness of many of our contractors to accept a lower rate in exchange for stability and longevity of contract working in the NHS.

Many of the IT specialists we place know they can still earn much more in the commercial sector, but they also recognise that with the NHS you are contributing to building a better health service, and a richer experience for patients, nationwide. It is our belief that despite the pay cap, a NHS IT contract can still be very satisfying. Many contractors we place agree, but sometimes only to the extent that they use a temporary contract as a stepping stone to an offer of permanent employment where, as yet, no such cap on pay is in force.

<<<<<<<<<<<<<<<<<<


This sounds very much like the guy trying his hardest to convince contractors to work for the abysmal rates on offer based on the fact that you'll be there for a long time - all wrapped up in that nice wooly feeling that you are doing something for the greater good. So reduced pay, higher tax take, still excluded from the welfare state when you're out of work. But the rates do factor in the lack of holiday pay (hence the higher pay than the permie equivalent) but seem to miss the fact that per contractor is and easy to hire/fire skilled resource, doesn't get/need training and is expected to hit the ground running. It also fails to take into account that the permie they are comparing the contractor to has a gold plated public sector pension that the rest of us are funding...the contractor included!

Exactly what calibre of contractor they are expecting to get for those rates is pretty obvious - the bottom rung of the PM rate is £163 a day or 37.5k a year based on a 46 week year, before deductions and with no bench time.

I appreciate it is bad from for the public sector to pay more than the private sector but they aren't going to get anyone worth having at those rates.

[mudskipper]

I'm currently working with a staffing agency (mostly provide temp staff into the NHS) and while they're concerned about what will occur no one is thinking "what will the contractors do?"

Just had a conversation, and they hadn't even considered it...

Question:
They employ and pay the contractor (mixture of umbrella, limited and PAYE) and then bill the NHS. Is it that any payment to a contractor after March 2017 must be PAYE, irrelevant when the contractor billed the agency or just work performed after March 2017?

And, when the agency invoices the NHS, does the agency have to ensure that all invoices billed after March 2017 are 'paid' at PAYE or just when the work is performed after March 2017?

Umbrella users are out of scope. It will be up to the client to determine the IR35 status of contractors operating via limited company, and if subject to IR35 the agency will need to deduct tax and NI. Payments made after 6 April are subject to the new regulations regardless of when the work was undertaken. It's not clear whether this relates to when the client pays the agency.

[b r]

• Project Managers -- now paying £163 to £200 per day (was £250 to £300 per day).

Since the PM's I worked with in the NHS were mostly Band 7's (so £32k to 42k) you'd actually be worse off than a perm at those rates once you've factored in PAYE - especially taking into account the generous sick/holiday pay, flexi-time etc that the perms get.

[b r]

On your specific technical question, the draft ITEPA is quite clear that it applies to payments made after this date, which could (almost certainly will, for existing contracts) include work completed before this date. There is a questionmark over which of the payments is the withholdable payment (PS > agent or agent > PSC), but it's definitely based on payment dates and not on work completion dates.

Thanks, I suspected this but our client thought/hoped it would only apply to work performed after. And yes, the withhold bit is still not clear to either of us.

[jamesbrown]

Thanks, I suspected this but our client thought/hoped it would only apply to work performed after.

That would've been far too sensible. If there's complexity to be found in simplicity, you can be sure they're on it.

[Andy Hallett]

Bearing in mind the technical examples have only just come out do you really expect them to have it sorted?

Err, yes - it's not a huge departure from the consultation document and not exactly a surprise.

[Andy Hallett]

I will repeat.

There are essential PS projects to complete.
There are not enough in house skills
Contracting is governed by supply and demand

[Semtex]

I will repeat.

There are essential PS projects to complete.
There are not enough in house skills
Contracting is governed by supply and demand

Exactly what I was saying earlier.

The problem is that most PS organisations will be up tulip creek fro a few months until the projects start slipping and ministers have to answer difficult questions