Register online or call us free on 0800 848 88 88

The Association of Recruitment Consultancies (ARC) is challenging the legality of the draft Agency Workers Directive Regulations which were laid before Parliament at the start of this year. Despite a two part consultation process, ARC have stated that the draft Regulations contain important aspects which were omitted from the consultations and should not be introduced as part of a secondary legislation such as AWD.

The point in question refers to recruitment businesses who have no contact with agency workers. These recruitment businesses do not fall within the scope of the AWD but the regulations provide that they can still be held liable for the acquired rights of the agency worker. ARC have questioned the legality of this position and has subsequently raised this issue with government, requesting that the relevant regulations be removed from the draft. ARC believe that the government is essentially redefining the employment relationship definition within law. However, the Department for Business, Innovation and Skills has yet to comment on this issue.

Adrian Marlowe, ARC Chairman, commented: “It is crucial to understand that this argument does not affect the rights of agency workers to equal treatment or enforceability against the actual temporary work agency or the hirer. It is unfortunate that so little time has been given to consider these regulations when we have pressed for more time, and that they have been laid before Parliament ahead of an approaching election when MPs minds are probably more on their constituents than anything else. However we are where we are and everyone can be assured that the ARC will take whatever action is required to clarify this issue as it could have serious consequences for agencies. The Government’s sledgehammer to crack a nut approach also highlights an element of mistrust of the recruitment industry that regrettably still exists in Government. This makes it all the more important that ARC pursues its objective of improving relationships and understanding between Government and the recruitment industry.”

The recession has had a detrimental effect on recruitment in the UK but new research conducted by ReThink Recruitment found that IT contractors were actually hit harder than anyone else, particularly as contractor rate reduction programmes were commonplace throughout 2009.

ReThink, a technology staffing company, found that during last year a massive 98 per cent of IT contractors were faced with pay cuts or pay freezes. The average pay cut was around ten per cent. This was in comparison to 71 per cent of their permanent counterparts. The research also found that over half of the IT directors surveyed were planning to freeze pay rates during the coming year and 83 per cent expect that contractor rates will stay the same. It is unlikely, however, that IT contractors will see their pay rates cut this year.

Research suggests that the demand for experienced and skilled contractors is now beginning to pick up again. This is particularly true of contractors who are trained and skilled in LINUX, .Net, Java and C#. Demand has increased for these skills sets over the past three months, which suggests that contractor opportunities are set to increase in 2010.

Director of ReThink Recruitment, Michael Bennett, commented: “Contractors are more vulnerable to market fluctuations, so it’s no surprise they have been hit hardest by the recession. That said, with the job market now tightening rates for contractors should rise ahead of pay increases for permanent staff.”

A petition has been put together by the Federation of Small Businesses (FSB) alongside other recruiters and businesses to request the government to freeze national insurance. The FSB has conducted research which proves that is employers’ national insurance increases by the proposed one per cent, it will result in 57,000 job losses. The increase is also unlikely to reduce the public spending debt. The petition, which can be found at www.no-nics-rise.co.uk, is seeking to reverse the planned rise in contributions. The FSB believe that small businesses taxes should only ever be used as a last resort as small businesses play a vital role in the UK economy.

John Wright, National Chairman, Federation of Small Businesses, said: “This petition – calling for no rise in National Insurance Contributions – will tell Government that real action needs to be taken to really help tackle unemployment. The rise in National Insurance is a tax on jobs and will cost the country in thousands of jobs, as well as prevent small firms from taking on more members of staff at this crucial time in the country’s economic recovery.

“The FSB has been calling on the Government to take steps to make it easier for the country’s 4.8 million small firms to employ staff. The FSB knows that small firms want to recruit over the coming year, but are put off by taxes. The Government can give the economy a real helping hand by freezing National Insurance and helping to encourage small firms to grow and take on additional employees.”

As demand for IT services continues to recover, IT recruiters believe that contracted IT staff could be tempted to leave their current projects for better rates elsewhere. Many IT recruiters, who spoke to Contractor UK, stated that the increased demand for skilled IT contractors was resulting in increased pay.

Many contractors were actually hired last year when rates were particularly low. Many actually accepted pay cuts of between 5 and 25 per cent in a ‘take it or leave’ deal. Now these contractors are the ones most likely to ‘jump ship’.

Managing director of Jenrick IT, Philip Fanthom, commented: “Now that the demand is returning, this kind of approach may ‘come home to roost’ with IT contractors opting to move to other [richer] projects/clients.”

He also believes that the treatment of contractors during the recession will now “come home to roost” as poorly treated contractors move on to better paying projects.

This is a sentiment echoed by Bernie Potton of SQ Computer Personnel, who said: “There is no loyalty to a client that has itself cut rates mid-term (or) at contract renewal time mid-project.”

He continued: “The increase in demand as the market improves will certainly result in contractors who have had their rates cut, sometimes brutally and excessively, jumping ship mid-term for more money.”

Mr Potton concluded: “We have already started to notice a trend in contractors currently in the public sector sending their CVs around to find different roles. Perhaps they have already, internally, got wind of cut-backs and project cancellations.”

The government have formally responded to the Intra Company Transfer petition. Their message is that the scheme does not allow cheap migrant workers to be employed in place in UK workers. The petition aimed to highlight the unfair use of the scheme and called for its abolition by the Prime Minister.

The government’s response was as follows:

“Thank you for your e petition about the Intra Company Transfer scheme and non-EEA workers in the IT industry.

In November 2008, the work permit arrangements were replaced by Tier 2 of the Points-Based System. Tier 2 ensures that those who benefit most directly from migration, such as employers, play their part in ensuring the system is not abused. To employ an overseas worker an employer must be licensed by the UK Border Agency to act as a sponsor. Tier 2, like the work permit arrangements it replaces, is demand-led and not based on numerical targets or quotas. Overseas workers are granted permission to fill a specific skilled vacancy for a specific period of time.

Unless certain exemptions apply, employers must advertise their vacancies to UK workers, and demonstrate that they cannot fill the post with a suitably qualified or skilled settled worker, before they can sponsor a migrant under Tier 2. One exception is if the job is a recognised shortage occupation. The independent Migration Advisory Committee recently recommended that certain posts within visual effects and 2D/3D computer animation for film, television or video games should be added to the shortage occupation list. There are no other IT occupations on the list. Another exception is the intra-company transfer (ICT) route, which is designed to enable employees of multinational companies to transfer to skilled posts in this country and to enhance the UK’s competitiveness in attracting inward investment by overseas companies.

Currently, an ICT post requires that the migrant has had a minimum of six months previous experience working for the sponsor and will fill a genuine vacancy in the UK for an established employee that cannot be filled with a suitably qualified or skilled settled worker.

However, on 7 September 2009, following advice from the Migration Advisory Committee, the Home Secretary announced a number of changes to the ICT rules in Tier 2 of the Points Based System. From the spring of 2010 companies will only be able to transfer staff through the ICT route where they employed the individual for at least 12 months, doubling the existing 6 month threshold and the route will no longer lead to permanent residence in the UK. An additional route will be created to allow graduates on global graduate programmes to transfer to the UK for a period of no more than 12 months where they have three months experience of working for the company.

The off-shoring of IT work is not an immigration issue. The immigration arrangements do not prevent employers from outsourcing work to another company or bringing migrant workers into the UK for either short or lengthy periods of time, provided the relevant criteria are met. These are business decisions for employers to determine. Fair access to migrant labour can help to encourage large multinational firms to invest in the UK. In such cases, access to migrant labour encourages growth in the industry to accommodate both UK and migrant workers. UK workers also benefit from working with the most highly skilled workers from around the world and sharing expertise.

We do not allow migrant workers to be used as a source of cheap labour and undercut UK workers. Employers must pay salaries at that are least equal to those paid to resident workers with similar skills, as specified in the UK Border Agency’s guidance for sponsors. Sponsors must confirm the salaries and allowances of all migrants that they sponsor. This is checked when the migrant makes a Tier 2 application and verified through later compliance checks. If the company does not pay the stated salary, they risk losing their sponsor licence.

Migrant workers benefit from international tax agreements in the same way that UK workers benefit when employed overseas. Further information is available on the Directgov website.

We support employers who ensure their workers are accommodated whilst in the UK, but we have set an upper limit of 30 per cent of the gross salary package for this type of allowance. This limits the amount of tax relief they are entitled to, as well as ensuring that the workers are paid an appropriate rate for the skilled job they are employed to do in the UK.”

Siemens are the only provider of technology services at the BBC. At present they have more than 200 IT contractors working for the broadcaster but yesterday those contractors were asked to vote on a 24 hour strike.

Bectu announced the ballot and stated that they were forced into considering industrial action after 70 contractors were laid off and contractors were subsequently informed that their pay would be frozen. This ballot is due to run until 19^th March. It is the advice of the union that contractors should vote in favour of the strike. Obviously any industrial action at the BBC could cause a great deal of disruption to their services.

Five years ago the BBC sold off its own technology arm and chose instead to outsource their technology requirements. The contractors currently working there are part of a £2 billion contract. Siemens is also considering off-shoring 50 contractor roles in the BBC’s server management department.

Bectu have commented that all BBC permanent workers should expect a pay deal which equals the 3.7% Retail Price Index with a 2% pay deal for the IT contractors. Bectu said it was a “double whammy” that saw pay frozen and contracted staff let go whereas many permanent BBC staff had actually received pay rises.

Suresh Chawla, Bectu national officer: “With the level of redundancies that we’ve already endured, and continue to face, it’s not even as if a pay freeze is safeguarding jobs.”

Freelancer group PCG has launched a nationwide campaign aimed at highlighting the talent and skills which exists within the contracting population of this country and the contribution they make to the UK economy.

The campaign has been launched through newspapers and the website – www.britainsbraingain.com – which will be focussing on the effectiveness, imagination and ability of the freelancing workforce. PCG have also been giving interviews on radio and television shows to highlight the campaign and have achieved support from many big names in industry, including Sir Tom Farmer and James Bellini. Richard Lambert, the Director general of the CBI has also voiced his support, stating: “Labour market flexibility will remain the UK’s real competitive advantage.”

Figures actually reveal that the importance of the skilled contractors, freelancers and consultants and their ability to respond quickly to changing needs should not be underestimated. In fact, it is valued at £21 billion.

Managing Director of PCG, John Brazier, commented: “Britain’s Brain Gain campaign is quite simply a statement of fact. The talent pool of freelance workers offers flexibility to companies, groups and organisations; it helps them manage risk and unlock innovation and talent within their business. It’s a no brainer.

He concluded: “Britain’s Brain Gain can bolster expertise and improve speed to the market. I would say to every MD in the UK, while your competitor is thinking about it, you could have a team of freelancers delivering it!”

The Chartered Institute of Taxation (CIOT) has spoken out about their concerns regarding the increasing use of retrospective rules within the tax system in the UK. Following on from the High Court ruling a few weeks ago, the Treasury have since confirmed that retrospection would be applied to amend the tax rules on manufactured dividends. Stephen Timms, financial secretary to the Treasury, confirmed last week that this retrospective rule would be applied to October 2007.

Commenting on this development, tax policy director of CIOT, John Whiting told Contractor UK: “We think it [retrospective legislation] damages the key principle of certainty in the tax system that is so important to its reputation and is inherently unfair.”

The Chartered Institute of Taxation further evidenced their concerns by highlighting the section 58 addition to the Finance Act 2008 just two years ago. Of course, it has always been stated that the purpose of that provision was to tighten a tax loophole but it has resulted in a retrospective rule which can now be applied as far back as 1987.

The Institute stated: “We can understand that at times the government wants to take action to ‘confirm the general understanding of the tax system’ in the light of questions raised. However, this needs to be used with great caution: it must not dislodge the principle that the taxpayer is taxed on the wording of the legislation in place at the time of their actions. We are taxed on what legislation says, not what HMRC thinks it says”.

On behalf of CIOT, Mr Whiting concluded: ““We need a clear statement as to when retrospection will be used and its boundaries – and parliament needs to consider such boundaries with care.”

New data released shows that there are still a lack of job opportunities within investment banking as the sector struggles to regain public confidence.

Powerchex, a pre-employment screening firm, gathered the figures which show that stockbrokers and hedge funds have seen confidence slowly return but since the collapse of the Lehman Brothers, investment banking as a whole has suffered and, as a result, there are very little job opportunities for contract or permanent staff.

To gain this data, Powerchex made comparisons between the work opportunities between January last year and January this year. During this period recruitment for stockbrokers and hedge funds increased by 81% and 109% respectively. Investment Banks are actually planning to hire 60% less staff throughout 2010 than they did in 2009.

Powerchex also saw a decline in hiring between December 2009 and January 2010 with job opportunities for stockbrokers, hedge funds, investment managers and IT contractors slowing over this period. Firms continue their cautious approach as the economy continues to struggle to leave recession. As financial results are due in less than two months, the sector is waiting to learn of the official fall out from the economic downturn of the past twelve months during which time many UK businesses have failed thus having a detrimental effect on the economy.

Director of Powerchex, Alexandra Kelly, commented: “We have seen signs that the economy is on the up but firms are still being very cautious as many believe any recovery we may have seen is very fragile and could easily be knocked off course.”

A new survey of over 700 employers has shown a growing trend for IT companies relocating employment opportunities abroad. India is the most popular destination for relocating jobs abroad, although Eastern Europe is also proving popular.

The survey spoke to employers across all industries but, of those who claimed to have offshore intentions, nearly half were from the IT sector. Co-authors of the survey, The Chartered Institute of Personnel and Development, stated their belief that such offshore intentions represent a “medium-term concern” for the UK economy.

This is not news to the IT sector in India. In fact, at their principal IT conference, which took place just last week, the Indian IT body Basscom stated its belief that 150,000 IT jobs were likely to be created in the country this year. Their core markets are not currently growing as fast as their healthcare, utility and retail sectors therefore it is expected that IT jobs will be created rather quickly. Nasscom are of the belief that, over the next decade, Asia will account for over a quarter of the total IT and business consumption globally.

Jim Champy of Dell Services consultancy department believes that this year will see Indian companies purchasing more computer services than America and Europe. Speaking to the Financial Times he said that the money spent by Asian companies on IT will soon overshadow their Western counterparts.

TechMarketView analysts backed up this view, stating that IT firms in the West are already scrambling to “get a slice of the Asian action”.