It’s now been just over three weeks since the introduction of the controversial Agency Workers Regulations. This raft of new legislation, which gives certain equal working rights to agency workers after twelve weeks of continuous service, has proven troublesome for contractors operating through umbrella companies.
These contractors, despite never being the intended beneficiary of the new rules, have found themselves nonetheless with its remit – and umbrella companies and the agencies they use to place their contractors have been working to ensure their compliance for several months. Umbrella companies have been keen to reassure both their clients and the public that business is continuing as normal since October 1st – some going so far as to put out press releases essentially saying “Everything is fine!”
One large umbrella company was so keen to dispel the myths surrounding AWR compliance that they posted some porky pies on their blog. After some gentle coaxing the author eventually published an apology, but stopped short of actually correcting or retracting the original article.
Our advisors are fielding more and more queries from umbrella clients every day, and our AWR Guide has attracted plenty of comments from concerned contractors. These enquiries have provided us with an interesting insight into the extraordinary measures being employed to aid compliance. These include pay cuts and mass redundancies and re-hirings. In one case a contractor was working for two agencies who had different interpretations of the Swedish Derogation Model, resulting in him signing two different contracts for two different employment models for the same job.
This confusion is by no means helpful, but it is not entirely unexpected. Although the sky has not fallen in since October 1st (as some predicted), the Government is still proving reticent to address recruitment industry woes surrounding the AWR. Despite many calls for amendments and reviews, the implementation went ahead as planned. Most large recruiters believe they have implemented compliant models, however what actually constitutes compliance is still somewhat unknown due to the lack of case law surrounding the Agency Workers Regulations.
As some contractors are inside the AWR (umbrella contractors) and some are not (limited company contractors), the recruitment marketplace has also become flustered as hirers remain unsure which type of contractor is entitled to AWR benefits.
The lack of clarity has also resulted in many Crunch clients seeking guidance from our advisors. The short answer is that Crunch clients aren’t affected (as we mentioned above – limited company contractors are outside the AWR) – for more information you can download our plain-English AWR Guide, or visit our Agency Workers Regulation page
Gratifyingly for us – having always championed the limited company approach – some large umbrella companies are now conceding that a limited company is, in fact, the correct method to deal with tax and compliance, and are moving their independent contractors over to limited company directorship.