Crystal Umbrella

David Cameron has expressed his desire to review the effects of the impending Agency Workers Directive on employment opportunities. He is concerned that the extra rights and obligations will result in less contract opportunities.

His comments have been welcomed by the Association of Recruitment Consultancies (ARC). Their chairman Adrian Marlowe commented: “We agree that the issue should be looked at in the round as well as in respect of the Agency Workers Regulations (AWR). There is a clear distinction between agency work and regular employment. The former reflects the concept of short term deployment of labour and allows for the flexibility which has helped to provide UK hirers with a useful strategic tool for years. The distinction must not be blurred and the rules must be appropriate to enable agency work to function properly if jobs are not to be lost.”

Mr Marlowe continued: “Any assumption that a review of the regulations, or any other agency related regulations, would automatically mean that agency workers will be prejudiced would not be correct. What would prejudice agency workers is if the availability of work becomes limited because the rules do not work efficiently and if flexibility becomes unnecessarily restricted.”

The ARC believe that the current qualification period for the AWD legislation to apply to higher paid individuals. Mr Marlowe concluded: “It is perfectly possible for those agency workers who have been or are likely to be mistreated, as set out by the unions, to be set aside from the vast majority who are not. Those most likely to be taken advantage of can be protected more. The idea that only one rule is permitted with extra and over complicated rights for everyone, and that a more flexible approach is therefore to be condemned, must surely go against common sense.”

New research has been conducted by business advisory group IMS Executive Ltd amongst 2,000 interim executives to determine the manner in which they, including many of those who work through umbrella companies, would cut their daily rates of pay.

The data from this research has shown that most individuals have actually already cut their rates as low as they possibly can. However, for those executives who are currently charging from £500-£900 just over half said that they would consider reducing their rates between 10% and 24%. Lower paid contractors said that if it was a choice between cutting rates or being unable to continue working, they would cut their rates by up to 40%. Interestingly, the most highly skilled and highly paid interim executives were actually opposed to any cuts in their pay rates. These specialised individuals pointed to their change management experience; arguing that their track record had resulted in millions of pounds saved for the government and therefore any cuts in rates would be ’short-sighted’.

IMS Sales and Marketing Director, Tony Shearing, believes that the hiring of freelance staff is an economically viable option for businesses as they have access to these skilled workers without being responsible for paying out benefits applicable to permanent employees such as NICs and pension contributions.

He believes that contractors should be considered value for money as long as they have the skills and experience to deliver the results the client is looking for. It should not be about how little that contractor is willing to do the job for.

Public sector IT management company Socitm has found that while managers of public sector IT departments have succeeded with smaller budgets, they will have to streamline, or possibly even decrease, their budgets in order to survive the fresh round of cuts.

The group was speaking following the publication of research data that looked at IT spending in local authorities. It showed a “worrying” decline in IT spending across the board. There has been a drop of 16% in the past two years. However, the research also found that these spending cuts have not had any adverse effects on staff morale within IT departments.

Socitm Insight manager, Martin Greenwood, commented: “Of course, political pressures dictate that ICT must take its share of the current budget cuts but we advise the ICT function to focus its savings on its ‘business as usual’ capability, and to maintain or strengthen its capability to tackle transformational projects.”

Socitm continued: “Blaming ICT when a service fails to get the benefits it promised from a project saps the credibility of the ICT function, militates against investment in new ICT-enabled transformational projects, and limits the organisation’s ability to deliver savings without cutting front line services.”

The Socitm concluded: “Suppliers able to see the value of existing contracts will be better able to provide competitive bids for new business, while the exposure might embarrass some incumbent providers.”

The government is aiming to make the barring and vetting system more fit for purpose with increased transparency. The first step has been to release a new policy document which centres around contractors working in roles which require security clearance.

This new policy document has been released as part of a security clearance booklet published by the government. On its release the authors stated that the policy update “clearly underlines some important considerations that the statement[s] it replaces did not.”

The authors clarified the often-contentious situation where contractors who do not possess security clearance are prevented from applying for roles where that clearance are is required. This has often been considered a catch 22 situation for the contractors as they cannot apply for security clearance without a positions which requires it but they cannot apply for these positions without security clearance.

Speaking to Contractor UK, HMG Personnel Security Controls stated that there should only be “exceptional circumstances” which would preclude a contractor for applying for a position without possessing clearance beforehand.

Officials commenting on the new policy document, however, have criticised it for not changing this situation for all contractors. It has only altered the vetting system where short term contracts are concerned or when there is a position which must “be filled urgently”. The officials concluded that there is “no substantive change to the policy on security vetting.”

Cuts in the public sector have led to a reduction in the number of contract positions available according to the most recent analysis from the Recruitment and Employment Confederation (REC) in their Report on Jobs.

During July, demand for IT contractors reduced to 56.5 from 56.9 the previous month. However, considering the lull in hiring in May, July’s figures were still an improvement. In fact, considering that demand in July 2009 stood at 46.2 there has been a marked increase in demand over the past twelve months.

However, July’s decrease in demand for contractors has affected IT candidates alongside all other professional sectors. This was referred to by REC as a “significant deceleration in the jobs market”.

Chief executive Kevin Green commented, “Public bodies must avoid knee-jerk cuts to staffing levels which not only threaten the recovery of the UK jobs market but also undermine the delivery of key services.”

Mr Green stated his belief that job creation in the private sector should be a priority for the government, urging them to “do everything possible” to counteract the 600,000 job cuts which will occur over the coming twelve months. This is an estimate of the worst-case scenario in the public sector but does not take into account any job cuts within the private sector.

The result for contractors, of course, is that there will be more contractors competing for less contracts. According to REC, this has been the case now for 27 months in a row.

However, there is still a skills shortage in the IT sector. Candidates with Ped, .NET, SAP, It Security, Business Analysis and Office support skills are in particular demand.

David Cameron’s administration is expected to ditch the default retirement age as early as October next year. At present, when an individual reaches retirement age they can be asked by their employer to retire even if they would prefer to keep working.

The Department of Business, Innovation and Skills (BIS) have put forward a new proposal, which centres around a healthier lifestyle and the fact that as a nation we are now living longer. The idea is to give individuals the power to decide when they retire. This has been backed up by Edward Davey, employment relations minister, who claims it has been borne out of many individuals’ desire to continue working past the traditional retirement age. He said that such individuals should not be discriminated against.

The proposal has also been welcomed by a number of parties with a vested interested, including UK unions, employers groups and employers. Andrew Groves from Yell pointed to the opportunity to deal with skills shortages in the UK by permitting skilled workers to work for longer. Employers, however, regularly favour younger workers who have the energy and stamina required for a fast-paced working week but the skills of the more mature worker should not be overlooked. Critics have suggested that this could have a knock-on effect on the job prospects for the younger generation but the REC believe that as long as the government deals with job creation in a pro-active manner this needn’t be an issue.

While the TUC have also welcomed the plans proposed by BIS, they have also suggested that the coalition government consider allowing individuals to phase their retirement which would allow individuals to adapt to part time work before stopping work altogether.

David Gauke, Exchequer Secretary to the Treasury, has released nine separate documents which relate to tax. These documents are for discussion and consultation with the aim of providing individuals and businesses with the opportunity to have their say on the proposed tax reforms being initiated by the new government.

In the Budget back in June, the Chancellor laid out plans to reform taxation in the UK, making it simpler, more predictable and more stable. The nine documents which have now been published relate individually to PAYE reform, Pensions Tax Relief, Disclosure of Inheritance Tax avoidance, Controlled Foreign Company interim improvements, National Minimum Wage regulations, Furnished Holiday Lettings, Associated company rules, Foreign branch taxation and Modernisation of Investment Trust Company rules.

Mr Gauke said: “We want to make the tax system simpler and work better for the taxpayer. By reducing burdens, making the right choices and involving taxpayers, we are sending a very clear signal that Britain is open for business.

“We are committed to a more considered and open approach to tax policymaking. That is why consultation and scrutiny of our tax policies will be the cornerstone of our tax policymaking process. I want to encourage relevant parties to provide their feedback on the tax consultations we have published.”

These consultation documents have been welcomed by the CIOT. Their president Vincent Oratore commented: “We welcome the new Government’s commitment to meaningful consultation on tax issues. This is more evidence of the willingness of the administration to listen to the concerns and suggestions of the tax profession and work with us to produce a more efficient tax system.”

He concluded: “The Government’s objective of simplifying the system and reducing burdens on business and individual taxpayers is one that the CIOT shares. The more comprehensible the tax system the more likely it is to command public and business confidence and the more likely taxpayers are to get their tax right.

Crystal Umbrella welcome the proposed changes to NMW regulations as of January 2011.

Obviously, any increase in NMW is a good thing for the temporary labour market.  Not only will it go a long way in protecting the vulnerable sectors of the temporary labour market, but it will also allow them to receive full entitlement to state benefits (based on National Insurance Contributions).

For contractors, freelancers and locums currently earning NMW greater clarity is given around the claiming of travel (to temporary workplace) and subsistence expenses as they will not count as pay for NMW purposes. This area has been a concern and one that Crystal has campaigned for a long time.

Crystal Umbrella see this as a step in the right direction and a way of protecting those that need it, whilst providing an environment suitable for providing a level playing field within the contracting and freelance market

We reported earlier this week on the Office of Tax Simplifications IR35 Review which will make recommendations to the Chancellor George Osbourne in time for next year’s Budget. However, this is not the only task at hand for the OTS.

The body is also charged with reviewing tax reliefs which could also have a knock on effect for contractors. The Office will be looking at all personal and business tax reliefs, exemptions and allowances which are currently permissible by HMRC and deciding if any should be repealed. They will also be looking to simplify many of the tax reliefs since the overall aim of the government in reviewing the country’s taxation systems is to make them simpler.

The top priority for the OTS will be the reliefs which have been in existence for a really long time and those which are infrequently used. It is likely that some of the reliefs which will be come under scrutiny during this process are the travel and subsistence breaks. Any changes to these reliefs would have a knock-on effect on umbrella contractors. This has already attracted opposition from the Freelancer and Contractor Services Association (FCSA) who feel that such changes would undermine the strength of the flexible workforce.

FCSA chairman, Stuart Davis, commented: “The FCSA hopes that the OTS is not just Government window dressing or an excuse to remove important tax reliefs, but is independent of Treasury and will have real teeth in simplifying tax for the different labour markets in the UK.”

IT Recruiter CV Screen has confirmed that the second quarter of this year has seen a dramatic rise in the number of IT vacancies registered with them. They have made a comparison between this period and the same period in 2009 and have found the rise equates to a 47% increase. There has also been a 36% drop in the number of applicants per vacancy during this same period, down from 295 to 187. CV Screen has attributed this to individuals choosing to leave their current positions for new challenges rather than being forced to look for work thorough redundancies.

In a press release Matthew Iveson from CV Screen said: “We believe that the affect the recession had on the IT Jobs market is beginning to diminish. Companies are growing in confidence and in turn looking to recruit more staff. They are now able to plan for the future with more certainty. The drop in applications per role could well be a sign that IT professionals are being more selective in the roles they apply for. We have seen them place more importance on career prospects and training that a role offers, rather than just the financial rewards”

Mr Iveson concluded: “We have also seen that more candidates are leaving their roles out of choice, rather than due to reasons such as redundancy. This is a sure sign that the IT Jobs market is heading back towards pre-recession levels”