A positive spin on the autumn statement

With the growth forecast increased and borrowing revised down, everything looks rosy for the government. A drive to enable the public to share in the remaining privatisation of RBS next year also indicates that a general election must be right around the corner.

However, what about the details for our industry? Well…

You’ll have seen reports of reactions to the government clamping down on onshore intermediaries to prevent them from using contracts to disguise employment as self-employment. This will impact contractors who currently receive their pay as gross – a scheme that popped up after offshore was investigated.

The Office of Tax Simplification has also been asked to release some more quick wins, specifically with travel and subsistence. More clarity and guidance will be provided to ensure we at last have a level playing field with limited companies and gross schemes.

From 2015 under 21s will get a tax exemption from employer’s national insurance, which will hopefully encourage employment for younger individuals. A welcome tax break I’m sure.

In my opinion, the autumn statement is a big win for the economy, umbrellas, and, from 2015, under 21s.

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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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Have you met Atlantic Umbrella?

So, carrying on from my last blog in which I talked about Crystal Umbrella, I would like to introduce another member of the Unitum Group, Atlantic Umbrella.

The group acquired Atlantic Umbrella in June 2011 because it had a similar ethos to Crystal Umbrella.

Modelling itself on helping others and providing an excellent service, Atlantic Umbrella works closely with every contact, whether they are agency clients or contractors. Its mantra is to be relationship-focused and to always go the extra mile.

With its own bespoke dispensation, which is vigorously checked week in week out to ensure compliance, Atlantic Umbrella is also audited and approved by Professional Passport. This gives it the added endorsement and assurance that the company’s processes are compliant and that contractors and clients remain protected.

Atlantic Umbrella operates from its new offices in Mayfair, London, and shares full head office resources at the parent company’s residence in Hertford.

Feel free to pop in for a coffee and meet the London team to experience the warm welcome of Atlantic Umbrella for yourself.

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What’s the story with Crystal Umbrella?

Constant change seems to be a running theme in the umbrella industry. I have talked about a lot of this here in my blog, but I haven’t said much about my own companies.

Today I am talking about Crystal Umbrella.

Created to offer a PAYE service for contractors only, agencies and end clients who have workers being paid through Crystal Umbrella know that they are compliant, with tax and national insurance being taken each time they are paid.

This removes the need to worry about MSC legislation or IR35; both of which carry large risks and uncertainty.

Expenses are operated under a dispensation with the HMRC benchmark scale rates. Crystal Umbrella is proud to be Professional Passport audited. This ensures that everything that Crystal Umbrella does is to HMRC’s guidelines and expectations.

Our HR executive works to ensure that, regardless of contract duration, all our employees are treated as employees, in line with employment legislation. When issues arise, Crystal Umbrella works with the contractors and end clients to ensure the desired outcomes are achieved and that everyone has acted as they should.

Crystal Umbrella operates from the group company’s head office in Hertford and provides its services across the whole of the UK. With sales, customer service, HR and full back office support all under one roof, it is testament to team effort that Crystal Umbrella remains Freelance Supermarket’s number one umbrella company – as voted for by the contractors themselves.

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Umbrellas – making the irregular, regular

Often I’m asked what our unique selling point is. Surprisingly for some, it’s not enhanced take home pay. It is, in fact, this: We provide a platform that flexible workers can operate from while also having the security, convenience and regularity of full time employment.

This statement is true regardless of what the individual is looking to achieve; from securing a mortgage or assessing pension contributions, or working in the knowledge that the correct tax has been applied and deducted. Umbrellas smooth out the road so that thoughts can be on the job at hand rather than the onerous task of admin to enable the work to be done.

Sir Nick Montagu, former chairman of HMRC, once said that umbrellas make regular what would otherwise be irregular, and this is something I endorse fully as CEO of my business.

Whether for lots of short term assignments or sporadic working patterns, using an umbrella company ensures that the correct tax is applied and that employment remains a constant. They take away the worry about tax and pension contributions for individuals, and smooth out the road ahead for agencies with regards to Agency Workers Regulations and tax statuses of workers. Umbrella companies, specifically those that are purely PAYE based, provide a valuable service, not just in enhancing take home pay, but also in providing a smooth base to operate from.

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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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