Crystal Umbrella

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.

If you’re not subscribed to our Newspepper, register now!

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.

PAYE umbrella workers specialising in IT contracting could again find a surge in demand for their services following the implementation of a new European e-privacy directive, which became law in the UK on 25^th May. Yesterday we reported that the UK’s restaurant industry is poised to seek input from IT professionals to help them develop new mobile technology; they are also likely to need assistance with the e-privacy rules, as indeed will any company with an online presence.

The directive obliges firms with an online presence to gain explicit user consent before using cookies – the information that websites place on users’ computers to track their online activity. But one specialist insurer has warned that while there is uncertainty about the enforcement of the legislation, companies should act now to develop clear policies governing their use of cookies. Many website operators who routinely use cookies will be seeking assistance from contractors in the IT skills market to ensure their sites fully comply with the directive.

Alan Thomas, who is head of Technology and Media at the specialist insurer Hiscox, warned that there was “a great deal of uncertainty surrounding the enforcement of the new European e-Privacy Directive but the message to companies using cookies is clear: don’t allow a half-baked approach to cookie consent expose your company to prosecution.”

He went on to say that the issue of cookie consent is an emerging risk for UK businesses, especially those in the technology and media sectors. Companies must appreciate the importance of developing a clear policy for cookie use, he added.

Umbrella companies may well find their IT contracting specialists seeking placements in the restaurant industry after one expert called for it to embrace new mobile technology.

Andris Bezins, who is Chief Marketing Officer at Livebookings, Europe’s largest online reservations service for the restaurant industry, urged restaurateurs to make use of mobile technology in order to maximise their business potential.  In today’s 24-7 world, consumers increasingly want access to services at all times, and Mr Bezins believes that it’s now essential for restaurateurs to take this fully on board, shifting their business model in line with changes in customer wishes and behaviour so that the best quality user experience can be delivered.

He went on to explain that his company’s index study reveals that mobile technology is driving a major expansion in online reservations throughout many European markets today.  Mr Bezins believes that this is largely attributable to the burgeoning popularity of smartphones across Europe, which in turn has “fuelled the growth of mobile reservations.”

In response to the trend, Livebookings has recently launched a new mobile platform known as “Pocket Diner”, which is designed to help restaurants to maximise all booking channels.  Mobile technology can help drive profitability and footfall, Bezins insists, complementing a restaurant’s existing online presence.  Pocket Diner “creates a mobile-optimised version that’s suitable for devices like the iPhone and BlackBerry,” he added.

PAYE umbrella contractors with experience in mobile technology could shortly find themselves much in demand in a new corner of the IT skills market – the restaurant business.

PAYE umbrella contractors working in the financial services sector may draw some cheer from new research released by the specialist recruitment company Marks Sattin. Salaries amongst financial services professionals rose by 8 per cent during 2010 and are predicted to rise by 13.5 per cent this year, the figures suggest.

Dave Way, Managing Director of Marks Sattin, said that the recession had suppressed salary increases last year as employers sought to restore their margins. If similar trends continue into 2011, he explained, salaries may only rise by a similar amount (8.5 per cent) but there are signs of optimism amongst professionals in the sector that business will pick up. Mr Way added a cautionary note, however, and suggested that hopes for salary rises of 13.5 per cent be “over optimistic.”

Contractors used to working in temporary placements through their umbrella companies may be heartened by the study’s finding that pay rates for temporary staff in financial services remained higher than those for permanent staff and freelancers on long-term contracts.

The Marks Sattins study contrasts somewhat with new figures from Powerchex, which reveal that the two 4-day weekends in April resulted in a sharp decline in recruitment in financial services. Investment banking jobs declined by 30 per cent during the month and there was less recruitment activity in hedge funds and stockbroking. Even so, recruitment for investment banking countered the general trend by rising 19 per cent above the previous month. IT contracting, though, has undergone something of a recruitment bonanza, with 75 per cent more vacancies in the IT skills market compared to the same time in 2010. Companies seeking improved data security accounted for much of this growth.

Umbrella companies supplying contractors to the IT skills market may find themselves moving into the retail sector in the light of new figures from the recruitment firm ReThink Recruitment.  Demand for IT professionals has soared in the sector, more than doubling in the space of a year: ReThink received 218 requests for candidates with IT skills in the fourth quarter of 2009 but this had leapt to 564 by the same quarter of 2010.

Iain Blair, ReThink Recruitment’s Director, attributes the rise to increasing retail competition in providing mobile, multi-channel online and home delivery customer services.  This has not only increased demand for IT professionals but has also pushed up their pay rates, he observed, adding that IT specialists with e-commerce experience “are now commanding up to a 24% pay premium over colleagues in equivalent roles in other sectors”.

By way of comparison, programme managers in other industry sectors can secure pay rates of around £685 per day at present; in retail, by contrast, programme managers with e-commerce experience can expect to be paid £850 per day.  Project managers and business analysts can also command similar pay rates in the retail sector, ReThink Recruitment believes.  Blair was forthright in his assessment, declaring that “E-commerce and financial sector IT skills command the highest salaries.”

Retailers such as Morrisons, Waitrose, and John Lewis have driven the demand for IT skills as they seek to expand their home delivery services.  In addition, there may be even greater demand for IT skills in the sector – according to a report by Martec, 19 per cent of retailers intend to replace their e-commerce platforms over the next twelve months and a further 5% are planning to acquire an e-commerce platform for the first time.

Contractors working through umbrella companies may be interested in recent research charting the effects of the recession on the freelance jobs market.  Recent studies by PeoplePerHour.com, Europe’s largest online jobs marketplace, and leading HR group, the Chartered Institute for Personnel and Development (CIPD) both suggest that as permanent posts disappear, freelance opportunities are rising.

PeoplePerHour.com’s study confirms the earlier findings from the CIPD research – work that had previously been kept in-house, especially in the public sector, is increasingly being outsourced to contractors.  More than 120,000 freelancers regularly scour the 70,000 plus jobs advertised on the PeoplePerHour.com website.  And, PAYE umbrella contractors take note, a fair proportion of those jobs were once available only as salaried posts in the public sector.

During 2010, the body count of salaried jobs axed from the public sector in the wake of government spending cuts reached a staggering 132,000.  But data from PeoplePerHour.com suggests that, for example, digital projects once kept in-house in public sector organisations are now being outsourced as never before: the number of digital job postings appearing on the site leapt by a breathtaking 315 per cent over the last year.

The switch to increased use of freelancers by public sector organisations is a relatively recent trend, at least when compared to the private sector, which turned to contractors swiftly when the recession started to kick in, cannily saving the additional costs associated with hiring permanent employees.

However, a worry about these trends is that saturation point may not be too far off – without truly substantial economic growth, and more public sector cuts on the way, the freelance jobs market could well start feeling a little overcrowded.

In keeping with its promise to improve HMRC administration of IR35 regulations, the Government plans to set up dedicated helplines throughout the UK and staffed by specialist advisers.

Exchequer Secretary David Gauke and Office of Tax Simplification Director John Whiting were joint signatories to a letter to the OTS Chairman, Michael Jack, confirming that immediate abolition of IR35 was now off the government’s agenda, as indeed was the introduction of a new business test to assess whether or not individuals should be classified as self-employed.

As is well known amongst the UK’s contracting community, IR35 legislation has been dogged by sustained criticism for its lack of clarity over the issue of self-employment.  Many freelancers consider it excessively punitive and fatally ambiguous, so the government’s decision to retain it has not passed without some considerable controversy.  However, Chancellor George Osborne has insisted that the administration of the notorious regulations by HMRC will be substantially improved, and the dedicated helplines appear to be a clear step in this direction.

The letter makes clear that the helplines are actually part of a series of measures designed to improve IR35 administration.  Others include the publication of new guidance on the type of cases HMRC consider beyond the scope of IR35, restricting reviews to high-risk cases in order to promote a more tightly targeted approach to compliance activity, and the continuing monitoring of HMRC’s new approach by the newly created IR35 Forum.

Mr Gauke explained that the option of a new business test was discarded because, after due consideration, it was felt to be too challenging to devise in such a way that it would work for both business and HMRC.

PAYE umbrella contractors working in the IT skills market will be well aware that cloud computing technology is on the rise but, according to a leading security expert, it may also pose a “huge risk” for some businesses.

Hewlett-Packard’s Senior Director of Products, Application Lifecycle Management Software, Subbu Iyer, was speaking after the release of a report from the EU which endorsed cloud computing enthusiastically, highlighting its potential cost savings and the revenues associated with the technology. But Mr Iyer points out that many small firms who may be considering the technology are unlikely to have a security information team, a deficit which could expose them to significant security risks.

IT contracting may see something of a surge in demand as a result, as increasing numbers of firms seek to benefit from the cloud’s advantages. But My Iyer was at pains to highlight the “substantial risks” faced by newcomers to the technology, adding that security, availability and performance are regularly cited as the top three concerns inhibiting the wider uptake of cloud computing.

Number one on the list, Mr Iyer noted, was security. “It’s a huge concern,” he added. If companies are moving a critical business process completely onto the cloud, he continued, “the first area that chief information officers are concerned with is, ‘Is it secure?’”

Iyer believes that security concerns are playing a major role in both cloud technology and mobile computing – both of them central to the new economy. “There are a lot of applications being purpose built for mobile phones,” he noted. “How do you ensure that those are secure?”

A specialist in IT contracting has won a five-year long battle with HMRC over her IR35 status, the news outlet Shout 99 reports.

Elaine Richardson, who owns ECR Consulting Ltd, was accused in November 2005 of being a disguised employee.  As with a significant number of contractors who work through their own limited companies, she fell victim to the ambiguities surrounding IR35 from that moment onwards.  At the time, she was working as a freelance contractor for the firm Vertex Data Science; should HMRC have succeeded in designating her as a disguised employee, she would have faced a wounding tax bill of more than £50,000.

Thankfully, her recent tax tribunal found that on all three key status tests, her company was clear of IR35.  The tests – mutuality of obligation, substitution and control – clearly proved to the tribunal that ECR, in its wording, “is a genuine business and therefore not a target of the IR35 legislation.”

The tribunal ruling went on to acknowledge that ECR operates from a dedicated business area at Ms Richardson’s home, has a company domain and a website and advertises its services as a member of the PCG.  It has, the ruling continued, “… retained reserves and invested in development and has over the years taken on fixed price work for a variety of clients”.

Ms Richardson was represented by tax specialist Matt Boddington of Accountax Consulting, who expressed his satisfaction in the findings, saying that the Tribunal “had their commercial heads on and understood that contracting through a single person limited company is a prudent and sensible method of providing freelance services, and not about disguising employment”.

His views were endorsed by PCG Chairman Chris Bryce, who added that his organisation aims to “take all legitimate freelancers out of the scope of IR35”.