Crystal Umbrella

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.

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.

Umbrella companies and other employers will be required to automatically enrol their staff in a pensions scheme from October 2012 under new Government legislation. Even firms employing temporary workers for over 12 weeks will be obliged to adopt the same rule.

The Recruitment and Employment Confederation (REC) and National Employment Savings Trust (NEST) will attempt to clarify any confusion about the new rules in a workshop on May 17^th, which is free to all REC members. The organisation’s Head of Policy, Gillian Econopouly, billed the workshop as “an excellent opportunity” for members to understand what the new auto-enrolment reforms mean for them.

A major challenge that recruitment agencies may face when the legislation comes into force will be “churn:” around a million temporary workers are engaged on assignments at any one time in the UK, many of whom frequently change not only assignments but, on occasions, recruitment agencies in the normal course of events.

PAYE umbrella contractors whose company uses the same recruitment agency to find successive placements may be less affected by the reform, but large numbers of temporary workers are expected to want to opt out after their recruitment agency has enrolled them – a process which will be exceptionally time-consuming for recruiters who will find themselves constantly enrolling and un-enrolling staff. The REC has submitted its response to the Department of Work and Pensions consultation concerning the reform, warning that the additional bureaucracy will draw recruitment consultants away from their primary task of helping candidates find work opportunities.

Contractors working through umbrella companies or limited companies are likely to be intrigued by the views of a leading business futurologist who predicts that opportunities for remote and virtual working will rise steeply.

Dr James Bellini was commenting on a survey conducted by Orange National Business Awards which revealed that a large majority of UK businesses – 67 per cent – believe that new technology will drive massive changes in working practices over the next decade. By 2021, 40 per cent of those polled said that they expected the entire UK workforce (including themselves) to be working remotely.

As many PAYE umbrella contractors are already familiar with this style of working, they might consider themselves ahead of the trend. The business leaders surveyed were clear that a strong desire for improved work-life balance amongst British employees (and employers) would drive the trend forward as much as technological innovation.

Dr Bellini was forthright in his praise for freelance contractors and small businesses, whom he described as “extremely innovative.” He said that small enterprises and freelancers were playing a leading role in driving technological development forward. In particular, he singled out the life sciences and creative sectors, both of which he believes will perform especially well in the coming decade.

Dr Bellini’s comments came after a new exhibition was launched by Baroness Wilcox, the Minister for Intellectual Property, at the Life Sciences Centre in Newcastle.  This aims to educate young people living in the region about how creative new technologies can improve ordinary life.

Contractors working through umbrella companies or limited companies may well be encouraged by a new poll from the Institute of Directors (IoD).

The post-Budget IoD survey of 620 UK firms recorded a “significant boost” in business confidence. Well over half of the respondents – 58 per cent – said that they felt more confident following the Chancellor’s announcements last week. A mere nine per cent claimed to feel less hopeful.

The rise in confidence may well result in an employment surge, too, which would generate new placement opportunities for PAYE umbrella contractors and many others.

Noting that the economic recovery in the UK is very fragile, the IoD’s Chief Economist and Director of Policy, Graeme Leach, said that the poll provides encouraging news that business leaders “have responded so favourably to the Budget.” He added that confidence in these precarious times could make the difference between recession and recovery. The IoD’s Policy Voice Survey, thankfully, suggests that “the Budget has improved the outlook for business investment.”

The poll contrasts with one published last week by the Federation of Small Businesses (FSB) in the immediate aftermath of the Budget, which suggested that nearly half of FSB members (45 per cent) believed the Chancellor’s plans would have no positive impact on their businesses. Only 31 per cent thought that they would be beneficial.

Even so, FSB’s National Chairman, John Walker, commended the Chancellor for producing a pro-business Budget and listening to his organisation’s concerns. He believed, however, that Mr Osborne missed an opportunity to stimulate the economy by failing to extend the NIC holiday to micro-businesses.

Whilst contractors working for umbrella companies will have had their tax automatically calculated and paid, those who file self assessment returns should be on the lookout for a new e-mail scam, according to a warning issued recently by HMRC.

There has been an increase in the use of phoney emails disguised as official HMRC communications in recent weeks, this time advising people that they are entitled to a tax rebate.  But the first thing to note is that the real HMRC would never use email to inform taxpayers of matters such as this.

The fake emails contain a range of ruses aimed at getting people to divulge sensitive personal information.  One invites individuals to visit a webpage to verify their banking details; another claims that lottery winnings, seized goods or inheritance money will be paid as soon as the necessary personal banking data is supplied. Yet another invites people to download an attachment which ostensibly requests a refund through PayPal. In addition, HMRC warns, several such scams have emerged via SMS – recipients of these messages are asked to call a number in order to “claim” their “refunds.”

All are phishing exercises and should be avoided at all costs. If anyone receives such a message, HMRC requests that they forward it immediately to phishing@hmrc.gov.uk and then delete it without delay.

The timing isn’t accidental – the self assessment system inevitably results in many freelancers completing their returns at the eleventh hour (or later). Scammers tend to exploit flurries in activity to provide a convenient cloak for their nefarious deeds. Unsuspecting freelancers may be expecting all manner of communications and reminders from HMRC at this time of year, rendering fake tax-related emails more plausible.

HMRC will never contact you via email to request personal information or update you on personal tax matters.

The ranks of the UK’s umbrella companies could be swelled following the publication of a new report from the Institution of Occupational health and Safety (IOSH). It reveals that almost a third of the UK’s workforce claims to have experienced problems in personal relationships as a direct result of pressures at work.

29 per cent of the people polled in the survey said that their relationships had suffered due to a destructively skewed work-life balance involving excessive workloads and long hours. These were the two factors cited most frequently by respondents as exerting a harmful effect on their personal lives.

Commenting on the report, the Executive Director of Policy at the IOSH, Dr Luise Vassie, said that the struggle to attain a good work-life balance “is an ever growing issue in today’s society.” Too many people, she went on, are allowing work to dominate their lives, with the predictable consequence that home life suffers.

More people today are working harder than ever, a development which suggests that, far from freeing up greater leisure time, the long-reach, ultra-cast technology of the information age is simply increasing both the pace and duration of the working day. Relationships outside work are inevitably becoming strained as a result, a development which suggests that the old aphorism “I don’t live in order to work, I work in order to live,” has started to go into reverse.

People who have made the transition from permanent salaried employment to PAYE umbrella contracting often discover that they gain far greater flexibility over the number of hours they choose to work; it could well be that their numbers are about to surge.

Contractors working through umbrella companies and limited companies might wish to take up some advice contained in a new report from OfficeCavalry.com: start using social media to enhance your success.

The report presents figures which show that a massive 71 per cent of UK businesses are now working to improve their online presence through social networking sites such as Facebook, Twitter and LinkedIn. A quarter of those polled reported that they considered the use of online social networking as a business priority.

Contractors in the IT skills market might especially capitalise on this growing trend – there is likely to be a boom in the demand for social media skills at the very least. Thousands of short-term vacancies in this area are forecast in the report for 2011.

Fifteen per cent of the firms surveyed said that they planned to create specific new roles to manage the boom in networking. For the jobbing PAYE umbrella contractor, however, there’s even better news – a hefty 65 per cent of the businesses polled will consider hiring contractors and freelancers for these roles in order to achieve a more agile, flexible and scalable solution.

Commenting on the survey, OfficeCavalry.com’s founder, Andy Turner, said that organisations are changing the way they do business thanks to the rise of online reputation management and social media. As the social media landscape is ceaselessly changing, however, companies will be seeking to invest in more cost-effective, scalable and responsive approaches to managing the new media. Enter the social media savvy contractor.

Freelancers on the contractor payroll of umbrella companies or working through their own Limited Companies may be interested in a new study by professional services giant PricewaterhouseCoopers (PwC). According to the research, twice as many firms are planning to expand their workforce in 2011 compared to 2009.

In total, this represents around 28 per cent of UK firms, although the study also found that 15 per cent of those surveyed were planning “significant increases.” Recruitment is expected to be especially vigorous in manufacturing, technology and service industries.

PwC’s head of PR, Michael Rendell, hailed the accountancy firm’s findings as “encouraging news for the job market.” The headcount increases suggest that, in the wake of the austerities announced in the government’s Comprehensive Spending Review, many refugees from the public sector may be accommodated in the private sector in the event of redundancy.

The UK recruitment agency Jobsite also believes that the country’s jobs market may be improving. It noted a rise in the number of jobs vacancies advertised across a broad range of industries with a variety of different roles becoming available.

The latest news isn’t all positive, however. The Confederation of British Industry (CBI) has also just released figures which show that, during the November quarter, the UK’s huge service sector remained flat, with volume standing still at +3 per cent and value remaining stubbornly at -3 per cent. Whilst professional and business services remained steady, consumer services took a surprise tumble over the last few months. Reductions in consumer discretionary spending may be partly to blame, although the CBI also cited rising costs, falling prices and flat volumes.