Agencies and false self-employment

On the back of the Autumn Statement, HMRC has issued a consultation to establish agencies (the first in the chain) as responsible for the worker’s tax and national insurance contributions, in a bid to end false self-employment.

Will this get traction? Well I think so.

Reading through the consultation document, the intent is clear. While this will heap yet more administration onto agencies it will provide HMRC with a clear understanding of who is contracting and using which model – for the very first time.

The mechanics of it are now becoming clear – the agency will have to submit a quarterly return, similar to RTI submissions. This will identify who is doing what. HMRC can then put together a summary of each provider and investigate those models promoting 85/90% returns. About time too!

What is good and encouraging is that PSCs and Umbrellas are clearly outside this scope and workers using these models will not be targeted.

So for agencies, having a PSL of compliant providers becomes even more important, especially as HMRC is looking to “transfer” any HMRC debt to the agencies should the providers not cough up…

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Thompson v Paymaster

A recent employment tribunal found that six workers paid by the now gone bust Paymaster were not in fact considered to be the umbrella company’s employees.

Clearly this immediately raises questions in relation to the treatment of workers employed through umbrella companies, but before we all get carried away, we should understand some of the facts behind the case and why the judge took that decision.

Firstly the umbrella company in question operated a “pay day by pay day” model, offering no employment in between pay days and therefore no ongoing employment rights.

This is not how compliant umbrella companies work and I can only assume it is one of the reasons that Paymaster ceased to trade.

Secondly the six workers, who were owed payment when Paymaster went into receivership, were not represented and were asking the tribunal judge to ask the secretary of state to pay the unpaid remuneration, in line with Section 182 of the Employment Rights Act. Under normal employment this would be the case, however, due to there being no control through obligation on either party, the judge ruled that they were not in fact employees.

So how can agencies ensure that their umbrellas are compliant once again? Unfortunately it comes down to understanding the umbrella’s actual model and asking for clarity. Additionally, an umbrella which is a member of a professional body such as Professional Passport would be audited to ensure that they do employ workers compliantly.

Within my companies – Atlantic Umbrella and Crystal Umbrella – we take the employment of contractors seriously. We have an in-house HR department and provide all employment rights regardless of whether the worker is on assignment or between and therefore working under mutual obligation and a truly overarching agreement.

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Pension auto-enrolment dates in discussion. Are you ready?

The Department of Work and Pensions is now revising its consultation on pension auto-enrolment.

From 6 September until 17 October, it will be looking at the earning thresholds at which employers will need to enrol their staff. With the first round of enrolment due to kick off next month, it’s interesting to see the rest of the dates still in discussion.

Initially it was planned that all companies would auto-enrol at the same time. Now it will be phased in over a few years, dependent on company size, which is a good indication that the consultation process is working and that government is listening.

As of October, employers with 10,000 or more staff will be obliged to enrol all workers who meet the age and earnings criteria into a workplace pension, and this will need to be completed by March 2013. The thresholds currently being discussed determine who contributes and how much this will be. When this was originally introduced as an idea, the plan was to ask for contributions of 11%. This is expected to ramp up after the consultation.

The date for companies with 250 staff is still being discussed, and they will get their date in 2013/14.

For most umbrella companies, the auto-enrolment date will be next year, but it’s best to be prepared now. Thinking about how this impacts umbrella and contract workers is interesting, and our initial thoughts would be that the majority of our staff will opt out, rather than suffer the full brunt of the cost, choosing private pension schemes instead.

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Illegal employment: who vets your staff?

This week 20 Tesco workers were arrested for breaching the conditions of their visas at one of the company’s dot com buildings in Croydon. Now facing fines of up to £10,000 per worker and further investigations, the case highlights an important issue that many companies face.

Whose responsibility is it to vet workers? Does it lie with the agency, the payroll provider, or the end client that they’ll be performing the work for?

I often speak with clients to find out whether they know their workers; whether they are directly employed or placed through agencies as temporary cover. Sometimes the situation could be so complex that the agency that placed them used an intermediary to find the worker, then a provider for payroll and the vetting of staff as the end client or ultimate hirer.

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