Crystal Umbrella

PAYE umbrella contractors with expertise in the IT skills market should consider placements with small tech firms, according to one expert who believes they provide exciting opportunities for tekkies.

Ian Hogarth, the Chief Executive Officer of the music website “Songkick,” claims that smaller companies emerging in the technology sector can deliver a stimulating and stable working environment for freelancers specialising in IT contracting. Songkick itself represents one of the success stories for such firms – launched only four years ago, it’s now a thriving enterprise.

But Hogarth’s invitation came with a note of caution: economic circumstances remain extraordinarily difficult for small businesses in particular, and small tech firms have not received sufficient government support at the crucial start-up phase. With government backing, however, he believes they could easily become a highly attractive option for the UK’s best IT talent.

He urged the coalition to do all in its power to assist start-up tech firms to flourish. This would help stop the bigger companies from mopping up all the leading IT talent and help the crucial smaller business sector to drive employment upwards. He said, “We’d like to see the government promote start-ups as a stable, legitimate and exciting option for graduating software engineers.”

Hogarth drew attention to a disturbing fact – even though the UK has some of the finest educational institutions for engineering in the world, most of the country’s top engineering graduates end up joining a management consultancy or a bank. Too many IT graduates think that jobs in software development with a new company are still too risky and they want a more secure option. Adequate government support would dispel this fear, Hogarth believes, and attract talented software engineers – the “lifeblood of tech start-ups” – toward working in new firms.

IT contracting in the financial services sector continues to have decidedly healthy prospects, new research suggests.

The study from the contractor service provider Giant Group suggests that insurance firms and banks are boosting their IT expenditure, a development that hasn’t gone unnoticed by many PAYE umbrella contractors in the IT skills market. A third of IT contractors believe that it will be the financial services sector where most IT jobs will be found in the coming year – a significant rise from the same time last year, when only 8% of those polled felt that way.

The number of contractors anticipating that the public sector will produce the most jobs has virtually halved, plunging from last year’s 17% to today’s 9%. In 2008, the proportion was a positively buoyant 30% but the government’s austerity measures have since taken the wind out of the public sector’s sails. With public sector opportunities evaporating, the finance sector is becoming considerably more important to specialists in IT contracting.

Experience and skills in cloud computing will be especially in demand, according to the Giant Group’s Managing Director, Matthew Brown, who believes the evidence now suggests that banks are “ramping up spending again” after the recession, during which they pulled out of many IT projects.

In addition to efforts to improve productivity through cloud computing, banks also have to deal with new regulations aimed at making them more transparent. Brown believes this, too, is driving demand for IT contractors.

The research heralds a welcome change in fortune for IT contractors, who suffered acutely during the depths of the financial meltdown.

The latest Report on Jobs published by REC and KPMG may not cause many PAYE umbrella contractors to break open the champagne, but it brings modestly encouraging new nonetheless. Recruiters reported that contractors working for umbrella companies were still in demand during July, with both temporary billings and permanent placements rising moderately.

Pay rates also rose from the low-point reached in June but remain subdued. Contractors in the IT skills market will be reassured to find that workers in that sector, along with engineering and construction, were the most sought after. Moreover, the supply of permanent candidates reached the best level in 18 months, while temporary availability hit its strongest point since February.

Commenting on the figures, the REC’s Chief Executive Kevin Green said ”This month’s Report on Jobs shows that the rate of jobs growth in July quickened from June’s figures. These figures show that the jobs market is continuing to perform well despite general weakness in the UK economy.  We have now had two years of continuous growth and employers are still continuing to hire staff, albeit not in the numbers needed to radically reduce unemployment.”

Mr Green added that the key reason why employment is continuing to grow even in difficult economic circumstances is the UK’s flexible labour market – employers are increasingly turning to temporary workers and “continue to see the value of using a flexible workforce.”

KPMG Partner and Head of Business Services, Bernard Brown, noted that, although the jobs market hasn’t deteriorated, employers in all sectors continue to be cautious about taking on new staff. Government cuts and falling real wages continue to depress domestic demand, he added.

The latest Report on Jobs published by REC and KPMG may not cause many PAYE umbrella contractors to break open the champagne, but it brings modestly encouraging new nonetheless. Recruiters reported that contractors working for umbrella companies were still in demand during July, with both temporary billings and permanent placements rising moderately.

Pay rates also rose from the low-point reached in June but remain subdued. Contractors in the IT skills market will be reassured to find that workers in that sector, along with engineering and construction, were the most sought after. Moreover, the supply of permanent candidates reached the best level in 18 months, while temporary availability hit its strongest point since February.

Commenting on the figures, the REC’s Chief Executive Kevin Green said ”This month’s Report on Jobs shows that the rate of jobs growth in July quickened from June’s figures. These figures show that the jobs market is continuing to perform well despite general weakness in the UK economy.  We have now had two years of continuous growth and employers are still continuing to hire staff, albeit not in the numbers needed to radically reduce unemployment.”

Mr Green added that the key reason why employment is continuing to grow even in difficult economic circumstances is the UK’s flexible labour market – employers are increasingly turning to temporary workers and “continue to see the value of using a flexible workforce.”

KPMG Partner and Head of Business Services, Bernard Brown, noted that, although the jobs market hasn’t deteriorated, employers in all sectors continue to be cautious about taking on new staff. Government cuts and falling real wages continue to depress domestic demand, he added.

As the deadline for the implementation of the Agency Workers Regulations draws ever closer, contractors working through umbrella companies and limited companies alike may welcome the publication by the REC of a second batch of model contracts which are fully compliant with the new legislation.

The contracts are a key component of the REC’s AWR Advisor Toolkit, which was launched last week, and represent the culmination of the organisation’s efforts to help its members prepare their staff, agency payroll workers and clients for the activation of the new rules on 1^st October. The latest documents include Inside IR35 and PAYE model contracts (Contracts 3-8) as well as model contracts for the Swedish Derogation option.

The REC’s Head of Professional Services, Lewina Farrell, said that the organisation’s legal team had undertaken a “mammoth task” in updating all the model contracts to comply with AWR. “We had been working on the contracts for some considerable time to ensure they were all fit for purpose for our members. The contracts released today are for those workers who will be agency workers for the purposes of the AWR,” she explained.

With only a few weeks left before the implementation of the EU directive, forward planning has become increasingly urgent. The model documents should help all individuals and agencies affected by the legislation to move into the new, post-AWR era relatively smoothly.

Recruiters in Northern Ireland are not yet included in the latest REC publication, as the Department for Employment and Learning (DELNI) has not yet finalised its AWR guidance. As soon as it does so, Ms Farrell advised, Northern Ireland recruiters would receive their final documents from REC.

The economic role of freelance contractors working through umbrella companies and limited companies was highlighted this month by the PCG at the All Party Parliamentary Group (APPG) for the freelance sector.

The PCG’s aim was to generate discussion on how the Government can strengthen the economy by embracing the flexible working model exemplified by these often highly skilled workers.  The event, the first roundtable of the APPG, took place at the House of Commons and was attended by representatives from trade associations, business leaders, and academics.  It was chaired by Brian Binley MP.

John Brazier, PCG’s Managing Director, told the meeting that the UK’s freelance workforce today numbered at least 1.4 million, covering all industries from media to construction.  “We believe this figure is increasing and is adding value to the economy in a time of slow growth.  Now is the time to come together and work with Brian and the APPG to highlight these issues.  This event will allow the APPG to produce a report to raise awareness of freelancing in Government and amongst policymakers,” he said.

The meeting also heard from Professor Andrew Burke, founder and Director of the Bettany Centre for Entrepreneurial Performance and Economics, who explained that the task of securing wider appreciation of the role of freelancers had been hampered by a lack of research that could validate their economic importance.  The PCG responded by pledging to address the issue in the months ahead, aiming to produce new research in time for the next National Freelancer’s Day on 23^rd November.

The APPG aims to compile a report on “The Value of Freelancing” and present it to MPs in the autumn.

A new survey reveals that the number of women working in the IT skills market has been flourishing – and a substantial proportion of them is made up of PAYE umbrella contractors and other freelancers.

The number of women working in the digital sector has rocketed by 165 per cent, according to figures from the online business marketplace, PeoplePerHour.com. Almost half of the roles are in programming and design, while ten per cent are in database development and nine per cent in flash programming and wed graphics. Strikingly, 80 per cent of these women are working as freelancers though umbrella companies or limited companies.

The most spectacular rise was seen in the North, with a massive 1000 per cent increase of women entering the IT skills market in the region – and securing a 2995 per cent increase in earnings while they were at it. In the South, there was a more modest (though still impressive) increase of 72 per cent.

But that’s not all: women in the digital sector also managed to gain the highest rating for work quality, attracting an average “full marks” score of 5 out 5.

The IT skills market has for much of its existence been heavily dominated by males. But according to PeoplePerHour.com’s CEO and founder Xenios Thrasyvoulou, the latest figures “provide evidence that women have broken through the digital jobs glass ceiling and are now competing with men on both numbers of workers and on quality of work.”

The figures also show that women “are easily a match for men” and that attitudes have changed, Thrasyvoulou added: “Employers are now more likely to employ a digital worker based on the quality of their work rather than their sex.”

PAYE umbrella contractors eager to take up new work placements might do well to heed the advice of CV expert Peter Panayotou, who founded the specialist CV-drafting consultancy, The Write Stuff.  Poor proofreading that leaves errors on a CV can make all the difference between securing a new placement and being discarded, he insists.

Firms appreciate close attention to detail, and a sloppily drafted CV will convey precisely the opposite impression.  Panatayou suggests that contractors and other job seekers should not simply proofread their CVs meticulously but also get someone else to read them through as well.  A fresh pair of eyes, he says, “will always pick up on what you’ve missed.”

He went on to say that, from an employer’s perspective, “it is important that you show that you have been thorough”.  Computer spellcheckers should not be relied upon, he continued, because they are no substitute for human eyes – numerous spelling howlers and grammatical errors can slip through automated spellcheckers unless job hunters exercise great care in compiling their CVs.

His comments are borne out by recent research on the incidence of spelling mistakes and grammatical blunders in CVs.  The study, by the recruitment agency IntaPeople, found that almost 30 per cent of the 600 CVs it sampled contained major gaffes.

Moral of the story?  As a contractor, you may have outstanding talents to contribute to the IT skills market, for example.  However, if you allow sloppy spelling and clunky grammar to spoil your CV, nobody will ever find out.

PAYE umbrella contractors used to spending varying proportions of their daily life working from home might be interested in a new study from the TUC, which suggests that the number of people working from home in the UK has fallen slightly.

At the start of 2010, 3.7 million worked chiefly from home.  The number actually rose by a further ten thousand during the year but, in statistical context, it nonetheless reflects a small but perceptible drop, from 12.9 per cent of the workforce to 12.8 per cent.

Even though companies that allow their personnel to work from home usually find that it is a cost-efficient approach, saving money on office costs and allowing staff to manage their workloads more personally and effectively, the TUC believes that fewer workers are requesting home working arrangements due to anxieties over current economic conditions.  Rising unemployment and greater job insecurity seem to be deterring people from seeking the home working option.

Work Wise UK’s chief executive, Phil Flaxton, sought to encourage more people to request flexible working arrangements, however, insisting that it was sensible to allow staff to work from home occasionally – it prevents the stress of commuting and allows workers to get on with their tasks without the everyday distractions of the office.  Many contractors working through umbrella companies will undoubtedly be aware of these benefits already.

The Director of research at the Telework Association went further, claiming that flexible home working arrangements benefit both employees and employers and should be more actively promoted as good for business.  His comments coincide with those of Work and Pensions Minister, Maria Miller, who recently said that flexible working arrangements should increasingly become the norm, not the exception.

Perhaps those numbers might just start to rise again.

On the back of the recently released final guidance and as the October deadline draws closer, the introduction of the Agency Workers Regulations (AWR) is a hot topic – as it should be!

“The AWR is a piece of legislation due to be rolled out in October this year.  It is working towards affording the same benefits and concessions to temporary workers as to full time employees; based on a specified contract period and a number of comparative tests.”

Various Employment Agencies and Umbrella Companies within the UK are starting to announce how they will cope with the imminent introduction, with the Swedish Derogation Model being the ‘solution de jour’, as we predicted some time ago.

Meanwhile, many Employment Agencies and recruiters sit under the cloud of confusion that the ‘grey’ AWR brings.  Right now, all that is certain is that:

1. There is no “one size fits all” solution to AWR for the myriad of temporary and contractor workers
2. Clients and hirers must not bury their head in the sand, in the hope that doing nothing will work
3. Evasion is not an option; compliancy is the only way forward!

Crystal Umbrella maintains its position that we can assist you in the attempt to negate the risk and financial impact of the AWR, on both your business and that of your clients.  We can offer protection with a range of business solutions; designed to meet the varying and specific needs of your contractor workers and help guide you through any uncertainty.

However, responsibility still lies with both parties, to undertake practical work in terms of administering the regulations to provide the relevant information between them.  This responsibility will also apply to additional parties further down the supply chain, in order to fulfill their obligations and further protect themselves from any potential claim.

So, what “practical issues” should our Agency Partners be considering right now?

Day 1 Rights and Entitlements

Firstly, hirers need to identify if there are any comparable workers/employees to their temporary workforce, then they will need to;

• Establish which collective facilities and amenities are provided to these comparable workers,  and whether temporary workers have access to them
• Decide how to provide temporary workers with information about their facilities
• Ensure that all temporary workers have access to information about relevant vacancies

12 Week Qualifying Period

• Agencies need to consider what data is required from agency workers at registration, and on each subsequent assignment, regarding work history
• Evaluate their workers’ pay and treatment to that of the hirer’s comparable worker
• Agencies should obtain information from both the client and workers, to ascertain whether they have already worked any qualifying weeks (i.e. has the clock started).
• They need to define processes/systems to assist with the capture and tracking of the 12 weeks period

Contracts

• Identify and apply amendments to existing contracts
• Ensure terms are included in these contracts
• Understand when these contracts should be issued (e.g. Swedish Derogation contract must be issued prior to first assignment after 01/10/11)

Other Steps to Avoid Claims

• Establish whether your workers could be inside or outside the scope of the regulations
• Identify and engage reputable service providers (e.g. umbrella companies) that can limit the risk of AWR claims (or indemnify against them); whilst catering for range of contractor types, using a variety of business models and advice
• Ensure all parties are aware of the regulations
• Install systems to ensure agency worker queries can be dealt with quickly and efficiently

Agencies need to:

• brief staff about AWR and understand the timescales involved
• ensure staff know what information about equal treatment they will need to request from the hirer
• understand when this information will need to be collected from hirers, to allow them to provide correct treatment to the qualifying agency workers
• consider how this information will flow if they are multiple tiers in the supply chain

As you can see there is still a lot to consider and without adequate preparation, AWR has the potential to be a serious issue, so is no “storm in a teacup”. With that in mind we will be issuing a detailed guide to AWR for Recruiters in the upcoming weeks so keep an eye out…all our Newspepper readers will be first of course.

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For more information on how Crystal Umbrella can support your Agency when AWR comes in, please contact Tim Cumberland on 0800 848 8888 or email us at feedback@crystalumbrella.com.