Reply to: What do you think about the agency workers regulations?

[TykeMerc]

I skimmed over this initially thinking it wouldn't apply to me but suddenly something becomes very clear to me:

We will have one of two options:

1. Work for the agency/umbrella/consultancy (pretty much as a permie). Agencies and umbrellas will become more like consultancies.

2. We will work through our own LTD companies like big boys in a proper business to business relationship.

Unless there is a proper contract and watertight working practices, there is a real danger of option 1 kicking in. So agencies and clients will make damned sure that people take either option 1 or 2. There will be no more of this grey area in between with bulltulip clauses in our contracts. Agents and clients simply won't allow it for fear of option 2 contractors coming knocking on their doors wanting permie benefits later on. And that means that option 2 puts youquite clearly outside IR35.

Therefore, when 2008/104/EC, the EU's "Agency Workers Directive" is implemented into UK law, from October 2011 IR35 is STONE COLD DEAD. There will be no such thing as a "disguised employee" any more. You will either have a cast iron B2B contract or you will be a permie! There will be no ambiguity, the clients, agents and umbrellas will make absolutely certain of that. There is no way they will want you coming back and claiming employee benefits if you were engaged on a B2B contract.

I came to a similar conclusion when I read through the thread.

For that matter employees of larger consultancy firms than mine such as IBM, CSC, HP/EDS etc, etc, etc which are supplied to clients sometimes via intermediary companies would also be caught if I am.
If the deciding differentiating factor is that the intermediary is a recruitment company maybe they could set up partner companies to supply specialist resource on contract to bypass that particular piece of idiocy.

[Wanderer]

The meaning of agency worker

I skimmed over this initially thinking it wouldn't apply to me but suddenly something becomes very clear to me:

We will have one of two options:

1. Work for the agency/umbrella/consultancy (pretty much as a permie). Agencies and umbrellas will become more like consultancies.

2. We will work through our own LTD companies like big boys in a proper business to business relationship.

Unless there is a proper contract and watertight working practices, there is a real danger of option 1 kicking in. So agencies and clients will make damned sure that people take either option 1 or 2. There will be no more of this grey area in between with bulltulip clauses in our contracts. Agents and clients simply won't allow it for fear of option 2 contractors coming knocking on their doors wanting permie benefits later on. And that means that option 2 puts youquite clearly outside IR35.

Therefore, when 2008/104/EC, the EU's "Agency Workers Directive" is implemented into UK law, from October 2011 IR35 is STONE COLD DEAD. There will be no such thing as a "disguised employee" any more. You will either have a cast iron B2B contract or you will be a permie! There will be no ambiguity, the clients, agents and umbrellas will make absolutely certain of that. There is no way they will want you coming back and claiming employee benefits if you were engaged on a B2B contract.

I know some people will say that IR35 is a dead parrot already and in many ways it is but there are a lot of people who are trading under LTD companies as IR35 caught who will be forced to choose one way or another. And if they are given the chance, they will take the option of a proper B2B contract over working for an agency any day. Indeed, many agencies will refuse to engage people on any other basis. HMRC is going to lose a lot of IR35 cash.

But hey, look at the terms of the review of IR35:

* consider alternative legislative approaches that would be simpler and create certainty while ensuring that, where intermediaries are used to disguise employment, any income that is effectively employment income is taxed fairly

There will be no uncertainty once the Agency Workers Directive becomes law. Job done, no more IR35 needed.

So, is it any wonder that the Office of Tax Simplification is doing a rush job of reviewing IR35, a report which will be published in time for the next Budget in 2011 so they can get the new rules in before the new Agency Workers Directive becomes law in October 2011??

[malvolio]

Truth is, Opt in/Opt out to us, directly relates to what we HAVE To be shown to do for contractors. Opt Out, waives that requirement and turns it into a b2b relationship - which is a) easier, and b) more professional - oh and c) less risky!

Errm, no. All you can opt out of are he provisions of the agency regulations that try to give you employee-like protections over issues such as notice periods, handcuff clauses and payment, which are intended to protect the Office Angels types, not us bare-chested contractors. It has zero effect on your actual employment status (or IR35 or anything else). It is only there because those provisions would severely limit the freedom of action for companies who really want to grow by taking on more staff, nothing else. The supposed benefits to the average contractor are actually fairly illusory,

The AWD won't have an opt out. They simply won't apply to a Limited Company contractor. They will almost certainly apply to umbrella users.

HTH

[The Agents View]

Definition of "intermediary" needs to be clarified in the courts as a lot could do with how the contract is written. So wait a few years until some disgruntled temp then followed by a contractor tries it on.

The probable obvious solution for agencies is to ensure they don't name the contractor's company employee being supplied to the customer by the contractor's company in any part of the contract at all.

On another note - Why do agencies try and link every bit of legislation that involves them and contractors to opt-in/opt-out?

Truth is, Opt in/Opt out to us, directly relates to what we HAVE To be shown to do for contractors. Opt Out, waives that requirement and turns it into a b2b relationship - which is a) easier, and b) more professional - oh and c) less risky!

[Vallah]

I think the problem will be caused by:

(3) For the purposes of paragraph (1)(a) an individual shall be treated as having been supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer if—

(a)the temporary work agency initiates or is involved as an intermediary in the making of the arrangements that lead to the individual being supplied to work temporarily for and under the supervision and direction of the hirer, and.

If I read this correctly the AWD will apply to any individual working through an agency regardless of their status; the only way the regs will not apply is if the actual work done is being performed for the agency themselves and not the end client. From what I have read it would appear that the originally proposed legislation was never altered to accomodate single person limited companies because of pressure from the TUC who thought everyone should be treated 'fairly' - so subject to testing by lawyers it appears that after 12 weeks you will be an 'employee' whether you like it or not!

You're right Lisa, that's my understanding as well. Anybody who thinks that this won't affect IT contractors and the like wants their head testing, it's going to affect everybody.

[LisaContractorUmbrella]

I think the problem will be caused by:

(3) For the purposes of paragraph (1)(a) an individual shall be treated as having been supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer if—

(a)the temporary work agency initiates or is involved as an intermediary in the making of the arrangements that lead to the individual being supplied to work temporarily for and under the supervision and direction of the hirer, and.

If I read this correctly the AWD will apply to any individual working through an agency regardless of their status; the only way the regs will not apply is if the actual work done is being performed for the agency themselves and not the end client. From what I have read it would appear that the originally proposed legislation was never altered to accomodate single person limited companies because of pressure from the TUC who thought everyone should be treated 'fairly' - so subject to testing by lawyers it appears that after 12 weeks you will be an 'employee' whether you like it or not!

[SueEllen]

Is the get out for Ltd Co contractors not that we are not 'individuals' as specified in the rules above ? We are incorporated entities.

Definition of "intermediary" needs to be clarified in the courts as a lot could do with how the contract is written. So wait a few years until some disgruntled temp then followed by a contractor tries it on.

The probable obvious solution for agencies is to ensure they don't name the contractor's company employee being supplied to the customer by the contractor's company in any part of the contract at all.

On another note - Why do agencies try and link every bit of legislation that involves them and contractors to opt-in/opt-out?

[gingerjedi]

I did read an article on this (about 18 months ago so don't ask for the source), in effect it will mean a minimum contract rate would need to be applied to cover the additional costs should the contractor decide they would like to be covered by the regs, this meant someone opting out (should they be given that option) would expect a minimum of about £18 an hour which may seem pathetic to you high rolling developers but it would go some way prop up the ridiculously low rates being bandied about at the moment.

Of course I could have read it wrong or things may have changed somewhat since then? My memory isn't what it was.

[TestMangler]

Is the get out for Ltd Co contractors not that we are not 'individuals' as specified in the rules above ? We are incorporated entities.

[LisaContractorUmbrella]

This is the Government definition of an agency worker i.e. anyone who will be affected by the legislation:

The meaning of agency worker
3.—(1) In these Regulations “agency worker” means an individual who—

(a)is supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer; and.
(b)has a contract with the temporary work agency which is—.
(i)a contract of employment with the agency, or.
(ii)any other contract to perform work and services personally for the agency..
(2) But an individual is not an agency worker if—

(a)the contract the individual has with the temporary work agency has the effect that the status of the agency is that of a client or customer of a profession or business undertaking carried on by the individual; or.
(b)there is a contract, by virtue of which the individual is available to work for the hirer, having the effect that the status of the hirer is that of a client or customer of a profession or business undertaking carried on by the individual..
(3) For the purposes of paragraph (1)(a) an individual shall be treated as having been supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer if—

(a)the temporary work agency initiates or is involved as an intermediary in the making of the arrangements that lead to the individual being supplied to work temporarily for and under the supervision and direction of the hirer, and.
(b)the individual is supplied by an intermediary, or one of a number of intermediaries, to work temporarily for and under the supervision and direction of the hirer..
(4) An individual treated by virtue of paragraph (3) as having been supplied by a temporary work agency, shall be treated, for the purposes of paragraph (1)(b), as having a contract with the temporary work agency.

(5) An individual is not prevented from being an agency worker—

(a)because the temporary work agency supplies the individual through one or more intermediaries;.
(b)because one or more intermediaries supply that individual;.
(c)because the individual is supplied pursuant to any contract or other arrangement between the temporary work agency, one or more intermediaries and the hirer;.
(d)because the temporary work agency pays for the services of the individual through one or more intermediaries; or.
(e)because the individual is employed by or otherwise has a contract with one or more intermediaries..
(6) Paragraph (5) does not prejudice the generality of paragraphs (1) to (4).

As far as I am aware there will be no opt-out

[The Agents View]

Wanted to bump this up as was surprised there was so little interest in this.

This will affect ANY contractor working via an agency! May be less impact on those working via their own Ltdco than those working via Umbrella company - but will be impact all the same.

A lot of Clientco HR departments are going to be paranoid about this, so another microscope look at status of contractors on-site in their organisations.

Ties in with the drive for some agency's selling employed consultant model (other thread) - looking to be compliant to the AWR regs and reassure cleintco HR.

Would be interested to hear what / how your agents & clientcos are talking to you about this and your thoughts on the impact it will have to your business and the industry.

Firstly - Welcome to the forum - original screen name <sigh>

Anyway - just to add, that the AWR are fairly heavily dependant on the Opt In.Opt Out question - if you opt out, you are a consultant, operating in a B2B world. If you opt in, you are technically an employee after 12 weeks - thats how I understand it anyway.

As has been pointed out - this is unlikely to overly affect the professional contractor world, it is far more heavily orientated towards the temp agency sector - which I agree with the government on, it needed some form of regulation - if you think the pro agencies are shisters, you should see the way some of these temp agents operate!

[Jubber]

Ties in with the drive for some agency's selling employed consultant model (other thread) - looking to be compliant to the AWR regs and reassure cleintco HR.

Link please

I think I've asked this before - but why can't we have a relationship with agents like 'proper' agents?

e.g. Agent calls me up says "Hi Jubbs - I've got a contract here worth 26k - you interested? My cut is 15%"

If I am a contract is drawn up between my company and the client's company and I then pay the agent his 15% in stage payments at the same frequency as I invoice the client? Proper business to business relationship set up between companies and the agent bills me for the dosh.

[Another Agents View]

Wanted to bump this up as was surprised there was so little interest in this.

This will affect ANY contractor working via an agency! May be less impact on those working via their own Ltdco than those working via Umbrella company - but will be impact all the same.

A lot of Clientco HR departments are going to be paranoid about this, so another microscope look at status of contractors on-site in their organisations.

Ties in with the drive for some agency's selling employed consultant model (other thread) - looking to be compliant to the AWR regs and reassure cleintco HR.

Would be interested to hear what / how your agents & clientcos are talking to you about this and your thoughts on the impact it will have to your business and the industry.

[malvolio]

They will not apply to contractors working through their own limited companies. They will, however, apply to umbrella workers. So yes, quite a lot of people do need to understand them

[SueEllen]

The regulations are pointless.

In lots of cases companies use real temps for all positions that are equivalent so there is no permie comparator. Who would a company compare their one temp receptionist or one temp admin assistant with?

You could argue other secretaries or admin assistants but lots of companies that employ such temp employees don't have any other permie staff doing equivalent work.

Also companies that this is targeted at can easily ensure that all their workers are temps because a lot of them have been doing that for donkeys of years. I know because I worked at such companies in my youth.