The Agency Workers Regulations 2010 As It Is Today Will Change Before Its Full Implementation In Oct

The Agency Workers Regulations 2010 may lead to some major adjustments in the way

that agency workers are handled between temporary work agencies and umbrella companies. The basic principle of the regulations is to provide agency workers with the same basic working and employment conditions as their directly recruited counterparts. The regulations as they stand today, however, are likely to change before they are implemented in October 2011.

Who is liable if current regulations are not adhered to?

Currently, the regulations clearly state that liability sits firmly on the shoulders of the temporary work agency for any breach of basic working and employment conditions for which they are responsible. In their defence, if they can prove reasonable steps have been taken to obtain the relevant information from the end client to apply basic working and employment conditions, then the temporary work agency would not be liable. In this case the end client themselves would be liable.

Where an umbrella company is involved in the chain, the contract between the temporary work agency and the umbrella will determine the responsibilities of each party in the event of a breach of regulations. In addition, it is likely that there will be a chain of indemnities for breaches of regulations; from end client to temporary work agency and from temporary work agency to the umbrella.

Is anyone excluded?

An individual who is seen to run their own business will not be regarded as an agency worker and will be excluded from these regulations. Where the individual is either self employed, or is a director of their own limited company, the contract for their professional services will provide the temporary work agency with the status of client of this business undertaking.

The contract for their professional services will still be subject to the IR35 legislation and status of assignments will still be essential when these regulations come into effect. It is important that such individuals get the right advice as to whether they fall inside or outside the IR35 legislation

Furthermore, as the regulations currently stand, contractors working through an umbrella company will be excluded where the umbrella company pays the contractor between the assignments. This however is commercially unfeasible as when the contractor is out of work, they must be paid at least 50% of what they were earning in their previous assignment and no less than minimum wage. Moreover, the contract worker is entitled to be paid this for an accrued four weeks before the umbrella company can terminate the contract. This is something that is likely to be reviewed before implementation.

Should agencies just push their candidates through their own Limited Company?

IR35 has a role to play here and agencies need to be careful when advising their candidates to work this way. If agencies start advising all candidates to operate via their own Limited Company, they could also be confirming their candidates IR35 status. This could potentially leave some recruitment companies exposed to future liabilities where at a future date HMRC challenge their status and the candidate is found to be within IR35.

What to do next?

Sit tight. There is not much we can do until the current regulations are reviewed. As things stand, the regulations as they are today are going to leave some service providers in a tight spot. As a firm providing multiple solutions such as PAYE Back Office solutions for agencies, PAYE Umbrella, Limited company formation and accountancy services for contractors, we are geared to adapt to the regulations which will be introduced in October 2011.

For more information, feel free to call Danbro on 0800 731 3178 or email enquires@danbro.co.uk.

by: Alex Askew

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