Crystal Umbrella

Christmas Eve marks the day that the AWR’s first batch of ‘equal treatment’ provisions kick in to effect for temporary workers, a significant proportion of whom, of course, are made up of highly skilled PAYE umbrella contactors.

This Saturday sees the end of the first 12-week qualifying period defined by the Agency Workers Regulations, which came into effect on 1stOctober. But what are the implications for contractors working through umbrella companies?

Tom Hadley, Director of Policy and Professional Services at the REC, quickly reassured observers that “nothing cataclysmic” was on the cards. However, recruiters should use the date as a prompt to ensure that they’re “as prepared as possible” to deal with claims or queries from affected workers, he added.

Mr Hadley went on to say that the REC’s priority was ensuring that good internal mechanisms were in place to nip misunderstandings about the regulations in the bud. A huge surge in activity was unlikely, he believes, but went on to say:

“Ultimately, the best way of avoiding any tribunals will be to be to ensure that there are clear and transparent communication channels between agencies, candidates and employers.”

He anticipated that the number of tribunals resulting from the AWR would be limited, a view that the REC shares with other organisations such as ACAS. On a general note, he said, the overall demand for agency staff – including skilled PAYE umbrella contractors – remains strong. He pledged that the REC will continue to monitor the impact of the regulations “as we move past the 24^th December milestone.”

A dispute between the Royal Bank of Scotland (RBS) and Britain’s trade union, Unite, has highlighted the upsurge in contractor payroll in the UK. Whilst RBS has cut large numbers of permanent staff, an email leak over the bank holiday has revealed that around 3,000 freelancers are currently being used by the bank. However, Unite slammed the news, arguing that contractors should not be used in replacement of permanent members of staff.

The argument stems from a leaked email from Hays, the recruitment agency, reminding contractors to submit timesheets before the weekend of the latest bank holiday. Criticising the move to increase contractor payroll instead of having permanent employees, Unite’s national officer, David Fleming, said “It is wholly inappropriate that RBS, backed by taxpayers, appears to be throwing money at thousands of contractors.”

Freelancers association PGC however hit back at the criticism of RBS, expressing that it was a ‘knee jerk’ reaction. The Deputy Chairman of the group, James Collings, explained “RBS, in common with many organisations throughout the UK, see the merit in using a skilled and flexible freelance work force when and where there is a demand for their talent and paying these businesses a market rate.” He added that, with one in 20 now working as a freelancer, the contractors’ community was on the rise and had every right to be employed by corporate companies such as RBS. Whilst Mr Collings expressed concern at the leaked Hays data, he made it clear that contracting in the UK is becoming more prevalent than ever.

It has been revealed by the Recruitment and Employment Confederation (REC) that, with many companies reducing their plans to expand permanent staff, independent contractors are set to benefit. With the economy’s future remaining uncertain, the next quarter will see more temporary workers taken on as firms look at payroll outsourcing and IT contracting instead of having in-house staff.
With the economy remaining turbulent, it was shown that, in respect to staffing over the next three months and indeed the next year, plans envisioned at the start of the year to add employees to firms are to be downgraded. The result will see increasing work for temporary staff and independent contractors.

Director of research at REC, Roger Tweedy, explained that the downgraded company plans were an indication of the “uncertain economic context.” He added “With the economy continuing to stagnate, businesses will understandably remain cautious, which is why we are seeing an increase in the longer term demand for flexible staff, such as temporary and contract workers.”

With 83% of firms revealing that contract workers would stay at current levels or increase over the coming year, the future looks bright for contractors. Over the next quarter alone, 79% of employers said temporary staff would be boosted or held steady at a minimum. With payroll outsourcing and IT contracting two specific areas that are being utilised by firms to cut costs, those in these sectors are set to see rising amounts of freelance work.

It has been revealed in a new survey that up to three quarters of small business owners find it difficult to go on holiday and leave their work concerns at home. With many freelancers providing ongoing services for a range of companies, sole contractors also feel concerned, finding that they are unable to relax whilst away. Whilst umbrella companies offer the ideal support for contractors, the uncertainty of long-term work keeps many individuals from unwinding fully.

The news comes after Intuit, the accountancy software provider, revealed results of its latest survey. 72% of small business owners worked whilst away, with a seventh admitting they spent less time relaxing than they did working. In addition, 22% of those questioned admitted that their first day back in the office left them more stressed than they had been before going on their break.

With many of these concerns also relating to the freelance market, Inuit revealed that ‘work-cations’ were increasing in prevalence, with individuals going on holiday but taking mobile devices and laptops with them so that they could work whilst away. Managing Director of Intuit UK, Pernille Bruun-Jensen, said “Everybody needs to take time off now and then but our findings show that small business owners never switch off, even when they could really do with switching off. Rather than not taking a break at all, many of them are choosing to take their business away on holiday with them.” With umbrella companies seeing a rising number of people in the freelance field, more people than ever are expected to be indulging in work whilst away.

The NHS is seeking highly skilled specialists in IT contracting working through umbrella companies, according to data from the international recruitment firm Badenoch and Clark.

Contractors in the IT skills market who have knowledge of NHS data systems and SQL server business intelligence are experiencing increased demand for their services, figures contained in Badenoch and Clark’s latest Talent Spotlight reveal. The company’s Operations Director, Mark Gascoigne, says that NHS Trusts based in Birmingham are creating new NHS datasets and are on the lookout for skilled information analysts as a result. The health service needs to develop more robust data warehouse solutions and business intelligence, Mr Gascoigne explained, both of which are driving demand for IT contractors.

In London, numerous NHS Trusts are attempting to complete major projects and are seeking data migration professionals, especially those with testing and training experience in RiO and Cerbner, he added.

Outsourced work for IT professionals may also be more generally on the rise. Technology sector analyst Ovum claims that the utilities sector, which is known to be squeezed for cash, is reluctantly outsourcing IT work in a bid to keep the long-term costs associated with permanent positions to a minimum. Hiring PAYE umbrella contractors and other skilled freelancers is about the only option they have to keep permanent headcounts to a minimum.

The rise in outsourced work is hardly a tidal wave – Ovum’s Principal Analyst Stuart Ravens described it as small but significant – but it is a trend he believes will increase over the coming year. Utilities companies are beginning to realise that outsourcing must be given serious consideration.

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.

Two new forecasts offer opposing prospects for umbrella companies in the coming year.

PAYE umbrella contractors hunting for new placements may be heartened by the latest forecast from the CBI. It predicts that, while growth will remain sluggish throughout 2011, GDP will rise modestly in 2012. However, a study by the insurance firm Aviva suggests that 10% of small firms fear having to close unless trading conditions improve.

The figures come at a time when consumer spending appears to be faltering and most measures of business confidence indicate a decline. Even so, the CBI anticipates a 1.3% expansion in the UK economy this year and a 2.2% expansion in 2012.

Investment growth is expected to limp along at around 3.7% this year but the CBI believes it will rise to 9.7% in 2012. The CBI’s Director-General, John Cridland, believes that we may see a somewhat lacklustre recovery but the UK will nonetheless “remain on track.” His views were endorsed by the CBI’s Chief Economic Adviser, Ian McCafferty, who expects economic conditions to remain tough during 2011 but, as salaries improve and inflation eases, prospects will brighten in 2012.

The Aviva study is rather less optimistic, at least so far as the 500 small businesses it surveyed are concerned. 28% of respondents believed that another recession was likely, while only 13% remained positive about the economy. Aviva’s Commercial Product manager, David Bruce, explained that many SMEs “feel they are in real danger of losing their businesses should the economy fail to improve this year.” He noted new revelations that banks involved in the Government’s much-touted ‘Project Merlin’ have missed important lending targets for SMEs.

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.