Agency Workers Regulations and Financial Intermediarie Legislation

As of 6th April 2014 Temporary workers working through an Intermediary will be deemed employed by HMRC for tax and N.I. purposes and the Intermediary will have to deduct tax and N.I. paying employers national insurance unless the Intermediary can demonstrate that the Individual is not subject to (or  the right of) direction, supervision or control by any person.

Additionally as of 6th April 2015 the reporting requirements require the specified intermediary to report on a quarterly basis all payments made to contractors, the hours they have worked and details on the individual worker and the Limited company he/she contracts through.

BITE however will help ensure that contractors provided through its contracts are not subject to Direction, Supervision or Control and outside IR35 or PAYE them directly helping ensure they are compliant and the agency engaging them is compliant.

Are you also aware of the Agency Worker Regulations? BITE supplies people who are not caught by the AWR making candidates more attractive and reducing agency admin. They are either full time permanent workers , PAYE Swedish derogation temporary employees or opted out limited company contractors.

If you’re a contractor with a limited company, AWR legislation could affect the way you work. From April 2011 AWR legislation provides agency workers` the entitlement to the same or no less favourable treatment with respect to basic employment and working conditions, if and when they complete a 12 week qualifying period . The legislation does not greatly affect well paid contract professionals either; employed PAYE permanently by a consultancy and paid between assignments” the Swedish Derogation” or engaged through a Personal Service Company (PSC or TLC) that has opted out and is operating outside IR35.

Intermediaries legislation-reporting requirements

Most agencies will be classified as the “specified Intermediary” and have to report in great detail on there pool of Limited company contract workers. The report is specified in exact detail by HMRC and must be completed each quarter. BITE has also been able to replicate this report and supply is to agencies needing to report the detail saving both time and money especially where more than one BITE contractor is supplied.

Now all PSC’s will be tracked by HMRC and the need for them to be compliant and prove that they are not subject to supervision direction or control immense. has established a compliancy portal and a range of support services for professional contractors to genuinely prove that they are not subject to direction and control thereby protecting themselves and the agency placing them from any HMRC investigation or large bills incurred via the IR35 Legislation.

 

The AWR Legislation

On the 1st October 2011 the UK implemented the EU legislation for agency workers.

This means in practise two key stages;

Day one right for workers and equal treatment after 12 weeks. Some examples of day one rights include the staff canteen, car parking and child care facilities and it is the end client who has the responsibility for ensuring agency workers are provided access to these facilities. This includes access and information to job vacancies that permanent staff would also have access to. In the event of a dispute there is no liability on the recruitment company.

After 12 weeks the agency worker acquires additional equal treatment rights provided they remain in the same job role. This includes pay and bonuses, duration of working time and annual leave. The requirement is simply to treat the worker as if he or she had been recruited directly to do the same job. In the event of a dispute it is the recruitment agency that is initially held responsible but will have a defence if they requested the info and failed to receive it from the client/hirer. End clients can include indemnity clauses in their contracts to pass liability to the recruitment company. Equally recruitment companies supplying contractors through another organisation will need to request the required information just as they would do in dealing with the end client directly and checks will need making on the contract.

Where possible workers/contractors should always be advised on any pay/rate comparator data and asked to confirm if they operate through a limited company that they are in business of their own account.

So what are the likely effects?

  • Contractors moving either into PAYE pay between assignment Consultancy / umbrella schemes or seeking to set up their own PSC to ensure they are attractive to clients and agents.
  • Agencies preferring contractors using outside the scope of the regulations via PAYE umbrella pay between assignment solutions or opted out PSC’s set up and serviced through a legitimate professional firm of Qualified / Chartered Accountants to reduce their administrative burden.
  • PSC’S should operate on an opted out basis outside of IR35 which will mean careful contract checking and logging of contract details
  • Umbrella companies will need to obtain client information directly or through agencies (creating necessary administration) unless operating outside of the scope of the regulations(Swedish derogation and opted out PSC).
  • Various organisation may demand or offer indemnity against claims under the regulations i.e. BITE will indemnify its agency associate engaging it’s contactors to work at the end client.

CONTRACTORS

Will be more attractive to agencies as opted out limited company contractors outside of IR35 with no Direction, supervision or control, or working for a consultancy operating the pay between assignments “Swedish Derogation model”. This will take them outside the scope of much of the regulations and reducing the reporting admin burden. They can choose between being paid between assignments, working for a compliant organisation or working as a freelancer in business of their own account with a greater take home pay provided they are outside IR35.

AGENCIES

Will wish to avoid any liability from either the financial Intermediary legislation or the AWR, by using either Contractors who use a recognised Consultancy PAYE Umbrella payroll paying between assignments or PSC’S that are set up and serviced correctly through Qualified Accountants so that they pay all taxes due. They will still wish to encourage talented freelancers in the IT industry to work through them but will wish to minimise the risks of any liability through the AWR or F.I.L.They may wish to enjoy a supplier indemnity against any claim brought as a result of the AWR. Agencies are only likely to operate compliant PAYE CONTRACTORS WHERE THE CONTRACTOR IS A HIGHLY PAID PROFESSIONAL OUTSIDE THE SCOPE, OR WHERE THEY CAN EASILY OBTAIN THE REQUIRED COMPLIANCY INFORMATION FROM THE CLIENT ECONOMICALLY.

At BITE we will try to ensure our  contractors and client agencies understand the AWR and will indemnify those we work with against the AWR.

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More about the Agency workers regulations

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