Reply to: Agency worker regulations and IR35

[LisaContractorUmbrella]

And if they then fall inside the scope of the regulation then they would be entitled to holiday, Sick, Bonus payments from the client, YES , NO

Yes, unless they were working through an umbrella company that operates the Swedish Derogation Model which means the contractor works under a permanent employment contract; the question of equal pay in these circumstances is then no longer an issue

[LisaContractorUmbrella]

Speaking to my Agent he was saying that as long as the contractor is not worse off than an employee in the same role then the rules are not a problem. The issue comes if the contractors rate is less than the permie when taking holidays and sickness into account. For instance he has several call centre guys that are probably not earning enough compared to the guys sat next to them with 4 weeks holidays and sick pay...

The AWR doesn't only deal with pay, it also deals with holiday entitlements, working hours, rest breaks etc etc so your agent is not completely correct. When considering pay, you also have to think what is included in 'basic pay' as that is your comparator - basic pay includes overtime, bonus or incentive payments linked to performance, holiday pay and vouchers or stamps.

[Support Monkey]

Yes. But (a) they still wouldn't actually be employees and (b) their contract would probably not last very long.

Temps are not employees, under the terms of AWR they just have similar rights

I for one take every oppurtunity to prove i am a contractor in business for myself so would never look to go down this route but it does show that there is potential for this to happen however slim that chance maybe there is still a chance

maybe if this did happen it would force agencies/ clients to either make sure everyone they take on is definately outside IR35 or stop taking on contractors, wonder which one it would be

[malvolio]

And if they then fall inside the scope of the regulation then they would be entitled to holiday, Sick, Bonus payments from the client, YES , NO

Yes. But (a) they still wouldn't actually be employees and (b) their contract would probably not last very long.

[Support Monkey]

From the final guidance published by BIS:

"Simply putting earnings through a limited company would not in itself put individuals beyond the possible scope of the Regulations. Individuals may choose to do this for the sake of flexibility or for tax reasons. However where the relationship between the individual, TWA and hirer remains, in essence, a tripartite relationship and a hirer is not a client or customer of such individuals, they are likely to be in scope. In the event of a dispute, in order to establish if a worker is genuinely in business on their own account (B2B relationship) the courts have devised a number of tests which examine the individuals circumstances and consider all aspects of the relationship, including what a contract might say or what it does not say, the expectations of their parties and their conduct, to establish the reality of the relationship.

If the arrangements do not reflect the reality of the relationship (e.g. despite the wording of a contract, the actual reality is that the individual is not in business on their own account and they work under the supervision and direction of the hirer) or are an avoidance tactic, then the individuals are likely to fall into the scope of the regulations"

And if they then fall inside the scope of the regulation then they would be entitled to holiday, Sick, Bonus payments from the client, YES , NO

[craig1]

Speaking to my Agent he was saying that as long as the contractor is not worse off than an employee in the same role then the rules are not a problem. The issue comes if the contractors rate is less than the permie when taking holidays and sickness into account. For instance he has several call centre guys that are probably not earning enough compared to the guys sat next to them with 4 weeks holidays and sick pay...

That was the initial intentions when creating the regulations but when drafted they became generic, imprecise pieces of drivel that will help fund the pension funds of lawyers and tax accountants. You could be on £10,000 per day doing a similar job to a minimum wage permie and still be caught by the AWR's imprecision, if looked at with the right interpretations.

[bobspud]

Speaking to my Agent he was saying that as long as the contractor is not worse off than an employee in the same role then the rules are not a problem. The issue comes if the contractors rate is less than the permie when taking holidays and sickness into account. For instance he has several call centre guys that are probably not earning enough compared to the guys sat next to them with 4 weeks holidays and sick pay...

[LisaContractorUmbrella]

From the final guidance published by BIS:

"Simply putting earnings through a limited company would not in itself put individuals beyond the possible scope of the Regulations. Individuals may choose to do this for the sake of flexibility or for tax reasons. However where the relationship between the individual, TWA and hirer remains, in essence, a tripartite relationship and a hirer is not a client or customer of such individuals, they are likely to be in scope. In the event of a dispute, in order to establish if a worker is genuinely in business on their own account (B2B relationship) the courts have devised a number of tests which examine the individuals circumstances and consider all aspects of the relationship, including what a contract might say or what it does not say, the expectations of their parties and their conduct, to establish the reality of the relationship.

If the arrangements do not reflect the reality of the relationship (e.g. despite the wording of a contract, the actual reality is that the individual is not in business on their own account and they work under the supervision and direction of the hirer) or are an avoidance tactic, then the individuals are likely to fall into the scope of the regulations"

[malvolio]

Yep it would completely screw up the UK market.

Which, apart from it being almost impossible to win such a case given you are trying to conflate two compeltely separate legislative lines, is why I for one have never advocated anyone trying. We fight all these battles on the basis of being non-employees and independent businesses. If you think you want to be an employee, get a permie job.

Plus the chances of a half-sensible freelance being done for IR35 or being caught by the AWR are vanishingly small, unless you try really really hard.

[SueEllen]

Malvolio (and his PCG sources) may or may not be right - even the most informed (i.e. expensive) opinion is still just an opinion. No-one knows with absolute certainty until it goes before a judge.

I think it would be a tough case to win - and I doubt anyone has the resources/will to fight it, for what would be relatively small gains.

Even then it would have to go to a higher court to be case law so expect either side being given leave to appeal all the way until the Supreme court rules.

But if the nuclear option does go boom, the blast could easily wipe out a good chunk of the rest of us. If one ClientCo loses such a case and has to cough up a big sum of money, what do you think other ClientCo's will do with their stock of contractors on their books.

The case would be against the agency as well as the ClientCo.
There have been employment law cases with temps where the agency and end client were equally implicated.

If you want to assert "employee rights" in any fashion, you won't get much encouragement on here - for very similar reasons. Our selling point to ClientCo's is that they don't have to put up with that kind of crap from us.

Yep it would completely screw up the UK market.

[centurian]

Malvolio (and his PCG sources) may or may not be right - even the most informed (i.e. expensive) opinion is still just an opinion. No-one knows with absolute certainty until it goes before a judge.

I think it would be a tough case to win - and I doubt anyone has the resources/will to fight it, for what would be relatively small gains.

But if the nuclear option does go boom, the blast could easily wipe out a good chunk of the rest of us. If one ClientCo loses such a case and has to cough up a big sum of money, what do you think other ClientCo's will do with their stock of contractors on their books.

If you want to assert "employee rights" in any fashion, you won't get much encouragement on here - for very similar reasons. Our selling point to ClientCo's is that they don't have to put up with that kind of crap from us.

[malvolio]

Wanderer is right, the guidance actually contradicts the legislation in several places and an employment tribunal judge will make their decisions based on what it says in the legislation, not the guidance.

It's worth pointing out that the PCG Guidance was delayed while it was verified against the legislation by an indepenednet legal authority, so hopefully is accurate - or at least, as accurate as anything can be given the vagueness of the source material.

I'm pretty sure that REC took the same precautions

[Steven@Parasol]

Yeah, there is a lot of "guidance" about how various people think it should have been implemented but it might be best to have a read of the Agency Workers Regulations and see what the actual legislation says rather than what people (many with vested interests) would like to think it should have turned out like.

Wanderer is right, the guidance actually contradicts the legislation in several places and an employment tribunal judge will make their decisions based on what it says in the legislation, not the guidance.

[Wanderer]

Don't shout at me, I'm only reporting what we've been told by the guys at BIS who wrote the damned thing and who, we kind of assume, know what they're talking about.

Yeah, there is a lot of "guidance" about how various people think it should have been implemented but it might be best to have a read of the Agency Workers Regulations and see what the actual legislation says rather than what people (many with vested interests) would like to think it should have turned out like.

[Wanderer]

As far as I know, and am happy to be corrected, no one who has lost an IR35 case has gone on to file an unfair dismissal or similar type case against their previous client

But we are talking about the Agency worker regulations which haven't taken affect yet so they haven't been tested... The test for a contractor being outside the AWR is pretty much the same as the one for being IR35 caught. Clients and agencies are suddenly going to wake up and help clarify that we are either in business or we are effectively a permie.