Recruitment Consultancies

Social networking may partially replace traditional recruitment methods in the near future and could therefore reduce agency income. This is the view of Stephanie Lee, Sourcing Specialist for European Staffing for Intel Corp UK. Intel is the world's largest semiconductor chip maker, and invented the X86 series of microprocessors that are found in most personal computers.

In two recent decisions, agency workers supplied by employment businesses have been prevented from claiming employment rights against the end hirer. These decisions should serve as a welcome boost to the industry as clients concerned about employment status will feel that little bit more secure about engaging workers through third party staffing companies.

Following the recent news that JSA Services Limited, part of the JSA Group, owes £10.6 million to HMRC and has entered into a voluntary arrangement and that two other “umbrella service providers” have left contractors unpaid

JSA enters voluntary arrangement owing £11.3 million The well known umbrella company JSA Services Limited entered into voluntary arrangements with creditors in December 2009. Among its total debts of £11.3million was £10.6million owed to HMRC, including for PAYE and National Insurance contributions. Debts of this size usually only arise if there are fundamental flaws in computation and status, and could relate to incorrect payment of expenses.

The much anticipated Agency Workers Regulations 2010 were laid before parliament in January. The regulations are intended to give agency workers equal entitlement to pay and leave arrangements as if they had been recruited directly by their hirer, following an EU Directive finalised in December 2008. The Regulations are due to be adapted into law by March 2010 with application from October 2011.

The 2^nd Consultation on the Agency Workers Directive brings some key issues sharply into focus, says the Association of Recruitment Consultancies.

The government has published the response to its consultation earlier this year and the good news is that the Limited Company opt-out has not been touched, neither for limited company contractors nor for umbrellas. This news is very welcome.

ARC (the Association of Recruitment Consultancies) today 26th October 2009 welcomed news that Government plans to "gold-plate" the Agency Workers Directive in key areas, have been dropped.

The Government has now published its long awaited response to the first consultation on the Agency Workers Directive and the draft regulations they intend to introduce

Amongst a series of other proposals to delay new laws, the government has announced that it intends to delay implementation of the Agency Workers Directive in the UK until late 2011.

£173 million in fines for anti-competitive recruiters
As has been seen in the recent case involving the “Construction Industry Forum” the penalties for engaging in anti competitive behaviour are severe and can include fines, and in certain circumstances the disqualification of directors – but what effect could this have on your business?

HMRC have recently released Business Brief (50/09) announcing that they will be clamping down on expenses dispensations. Expenses benefits schemes are commonly used by umbrella companies or employment businesses to legitimately allow a worker to claim travel and subsistence whilst on assignment.

Brian, a recruitment consultant, is in the process of being made redundant from an agency. During the redundancy process, unknown to his employers, Brian has been sending details of clients and candidates to his personal email account.

The government has just announced a telephone helpline for workers called the Pay and Work Rights Helpline. The helpline is set up to give all workers including agency workers easy access to information about their rights.

Will and Holly were both sales consultants employed by an agency. In April, they went on holiday together to Goa. Unfortunately, 4 days into their 2 week holiday they both caught a nasty tummy bug and were laid up for the remaining 9 days of the holiday.

A key topic of conversation in the TUC Conference last week is that of strike action. As businesses are fighting to stay afloat, people in all industries are being threatened with job cuts and pay cuts, leading to a rise in employee unrest and threats of strike action. It is likely that as this threat increases, you could be contacted to supply replacements as your clients try to complete projects and keep the money coming in.

As the HR Manager may say – “unfortunately, as you’re aware, the company has to be making cut backs. As you’re the newest member of staff we have decided to make you redundant – last in, first out”. What is wrong with that?

Some of you may have read an article from Recruiter.co.uk sent under its email alert scheme headed “ Agency workers directive implementation delayed until 2010”, which stated that Gordon Brown has announced that the Directive will be included in the “next parliamentary session”.

In an article published in Personnel Today on 4th September the HR Managers of two hirers of agency workers indicated that once the Directive is in place they intend to hire temps direct from their own internal bank of temp workers.

What the above two articles demonstrate is how easy it is for facts to be misreported and also how important it is that trade representation is accurate and protective of members interests.

The Government’s second consultation on the UK implementation of the Agency Workers Directive (AWD) is expected to be announced at the end of September 2009. At this time, the government will advise on the results of the first consultation which ended in July and the draft legislation will be published for all to consider. Until the second consultation is announced, the potential outcome cannot be known.

The position regarding holiday pay for those on long term sick leave has recently been clarified by the European courts.

From 1st October 2009, the national minimum wage will increase from £5.73 to £5.80 per hour. A recruiter or umbrella company whose rates fall below such levels will be advised to address these matters with clients, unless there is already clear provision within contracts for an increase in rates to account for such costs

The case of a limited company contractor who has been able to successfully assert that he was an employee of his client has recently been raising eyebrows across the industry.

After weeks of hard work with the Institute of Directors the message that we have been attempting to publish that the government intends to massively gold plate the Agency Workers Directive has finally hit the national press.

HMRC has last week announced a consultation on the self employed status of construction workers.

The Swine flu pandemic is currently major headline news and having an increasing impact upon the population, there has been a natural increase in the levels of sickness absence and concern.

After a huge battle with recruiters in the middle of this decade the government finally settled on a formula for limiting temp to perm, temp to temp and temp to third party fees (“transfer fees”).

The Financial Times has reported on concerns by the Institute of Directors (IoD) that the government is proposing to gold plate the Agency Workers Directive.

At Lawspeed's seminar on 24th June Adrian Marlowe, Managing Director, explained that Government plans to implement the Agency Workers Directive go far beyond the intention of the EU Parliament...

Government plans to implement the Agency Workers Directive go far beyond the intention of the EU Parliament, warned ARC (Association of Recruitment Consultancies) today (25 June).

Lawspeed will be holding a series of seminars (London, Manchester and Birmingham) to analyse and discuss the BERR proposals for implementing the AWD in the UK

The government has finally published its long awaited consultation on new rights for agency workers...

The Association of Recruitment Consultancies vows to take a proactive stance...

The Government has launched a consultation on the Conduct of Employment Agencies and Employment Businesses Regulations 2003

On 17^th December the EU Parliament made a determined attempt to remove the Working Time opt out by voting for its removal ...........

The pre budget report contained the welcome news that the government has decided not to change the tax reliefs on travel expenses, but that is not the end of the matter....

The Government has today issued a new consultation – entitled “Tax relief for travel expenses: temporary workers and overarching employment contracts”. This marks the beginning of another phase in the government’s review of the agency sector

The Agency Workers Directive (AWD) has long been simmering in the background, with many believing it would never become law, especially since the Government was originally against the proposals. However......

15th July 2008

On the 9th June, the EU Council met and agreed points of principle as to the content of the proposed Agency Workers Directive......

10th June 2008

The government has announced that it has agreed a deal with unions and employers that will see agency workers receiving equal treatment as employees. Equal treatment will mean......

May '08

New regulations amend the Conduct of Employment Agencies and Employment Businesses Regulations 2003 ("Conduct Regulations") and introduce provisions that are intended to better protect agency workers with effect from 6th April this year......

March '08

In the hearing of James v Greenwich the Court of Appeal has clarified its position.........

February '08

Following representations put forward by Lawspeed, HMRC and the Treasury has abandoned the idea of introducing an audit scheme in the foreseeable future......

December '07

For an organisation to be an MSCP all that is required is for it to be ......

December '07

At Lawspeed’s fully attended one day conference held on 11th October Robin Wythes, of HMRC and responsible for MSC legislation, indicated that HMRC recognises the difficulties that employment businesses have in identifying whether a contractor is operating through an MSC.

October '07

For some months there has been speculation that an accreditation scheme, whereby HMRC will exclude certain organisations that are accredited from the scope of the MSC legislation, is under consideration by HMRC. Whilst this may be in the interests of those organisations that operate as centralised “accountancy” service providers  to workers provided via limited companies, the idea has always been open to question.

Following the publication of the draft Finance Bill in March 07 there has been considerable speculation concerning the meaning of some of the definitions. In particular the section that excludes organisations that provide accountancy and legal advice allows interpretation that facilitates the suggestion that some service providers to contractors can continue as usual. Does it or doesn't it?
September '07

Included within the Budget announcement are various changes to the drafting of the MSC legislation
Mar '07

Following the consultation announced on 6th December 2006 “Tackling Managed Service Companies”, the Government has now published its first draft of the threatened third party liability provisions, making third parties liable for the tax debts of an MSC.
Feb '07

On the 17th January Adrian Marlowe and David Vincent of Lawspeed met with six representatives of the Treasury to discuss the proposed new MSC legislation.
Jan '07

On 6th December 2006 the Treasury published a consultation document entitled "Tackling Managed Service Companies". The consultation invites comment on proposed new rules designed to stop certain managed service scheme providers from avoiding tax payments. The proposals could affect recruiters. Treasury invites Lawspeed to participate.

HMRC has announced in its business brief 06/06 the start of a review of the staff hire concession and the employment business concession, set out in business briefs 02/04 and 10/04.

Government announces consultation on the increase of paid holiday entitlement under the Working Time Regulations to include public and bank holidays.

Government say no need for new legislation on employment rights for agency workers.

The Court of Appeal upholds the decisions it made in Brook Street Bureau -v- Dacas in 2004 and at the same time finds that a limited company contractor is an employee of the end user. The consequence is that an agency worker and a non employed temp could be held to be an employee of an end user, leaving finance directors and HR in a quandry. May '06

The recent trend in court decisions has been to find that there has been an implied contract of employment between the agency worker and the end user client.
October '05

The issue of employment status is rapidly becoming a minefield for recruitment agencies and their clients.  Failure to keep up to speed with the constantly changing legal position can prove very costly.
July '05

Following the case of Dacas -v- Brook Street Bureau last year the Employment Appeal Tribunal (EAT) has upheld a decision of an Employment Tribunal that an agency worker, operating through a personal services company, is the employee of the end user.
May '05

Although subject to a right to appeal, in the case of Cable and Wireless –v- Muscat it has been found that express terms in a contract between the agency and the worker cannot affect the existence of an implied employment relationship between the worker and the end user company.
April '05

Following the result in the Brook Street v Dacas case earlier this year in the Court of Appeal we are starting to see evidence of temps ‘chancing their arm’ in tribunal claims against end user clients.  Two claims have been notified to us in the last three weeks indicating that the Brook Street judgment may not be as favourable to agencies as first thought.
July '04

A recent decision by the Employment Appeal Tribunal (EAT) could have significant implications for all agencies placing PAYE temporary workers with clients.
February '03

The Employment Status Review (ESR) was first announced by the government on 11th July last year in document called ‘discussion document on employment status in relation to statutory employment rights.’

Whilst many of you have no doubt heard of the proposed Agency Workers Directive (AWD), do you really understand the possible effect this proposal could have on your business and the recruitment sector?

Employment Tribunals (ETs) have made heavy weather of the provisions in the Working Time Regulations (WTR) relating to holiday pay.

Effective risk management is crucial to businesses of all sizes and is no less important to a recruitment agency when the market is in a downturn.

Clients are becoming increasingly concerned about possible claims for employment rights from limited company contractors and temporary workers supplied through agencies.

It seems that the DTI and the Government are unwilling to remove limited company contractors from the scope of the new Agency Regulations.