Crystal Umbrella

Contractors working through umbrella companies can avoid delays in starting new placements by taking health and safety training before their contracts begin, the firm HSE Passport advises.

The company, as its name suggests, provides PAYE umbrella contractors with a recognised HSE ‘passport’ which shows recruiters and employers that up-to-date training in health and safety legislation and practises has been completed. This spares them hours of compulsory in-house safety training before starting new placements and enables them to ‘hit the ground running’, getting stuck in to the work they were hired to do from day one.

HSE Passport’s General Manager, Guy Schrecker, confirmed that employers would recognise his firm’s passport card as proof that the contractor is ‘health and safety-ready’ and does not need to undergo any safety induction training before beginning the placement. The passports are portable and can be carried by the contractor from project to project, he added.

Mr Schrecker believes that recruiters should now make them compulsory. The benefits to clients are obvious – they save valuable time and money. Many umbrella service contractors may soon find themselves beginning an HSE passport training course if recruiters take up Mr Shrecker’s advice.

Although many of them might at first balk at the idea of compulsion, there are clear advantages to contractors, as well as employers, not least because they open the door to immediate starts when contracts are secured. If an HSE passport makes it quicker to begin working (and getting paid), it seems altogether less objectionable to be required to have one.

PAYE umbrella contractors are occasionally asked by some recruiters to undergo psychometric testing to determine their suitability for various roles. However, a specialist workplace assessment group has raised concerns about recruiter misuse of the tests.

Talent Q believes the problem is getting so bad that some recruiters are in danger of spoiling their employer brand unless they smarten up fast. Although more and more organisations are turning to psychometric testing to identify the strengths and weaknesses of candidates for advertised posts, the group has received evidence that some recruiters fail to explain the relevance of the test to applicants, an omission which is at the very least discourteous. Placement-hunting contractors working through umbrella companies, along with other applicants, are entitled to a little respect. Perhaps more seriously, they also fail to give any feedback to candidates after the test, which is in fact a clear breach of the requirements of the British Psychological Society.

Not only this, but data storage is often decidedly messy, with no central records being kept and much duplication occurring. Unsurprisingly, this fosters frustration in candidates, who could be forgiven for assuming that the employment agency is inefficient. Candidates, Talent Q insists, should also be given feedback following unsuccessful applications; in the absence of this, they are inclined to assume the test result was their downfall, but other factors are often the real reason.

Steve Dell, Talent Q’s Chief Executive, said that good practise requires that candidates receive an explanation about what psychometric assessments are designed to achieve. They should then be helped to proactively plan for the test. Feedback, he insisted, should be given throughout the application process.

Most contractors working through umbrella companies will share widespread concerns about the UK’s economic prospects in 2012, although those with experience in the service sector can at least draw some comfort from a new survey conducted by Markit and the Chartered Institute of Purchasing and Supply.

PAYE umbrella contractors working in the sector may already have noticed that demand has been keen in recent weeks, an impression confirmed by the survey, which shows that activity climbed healthily last month. In fact, in December, the sector saw its highest activity rate since July, according to the Purchasing Manager’s Indexes.

Other trends noted in the report include the first rise in growth for nine months across all three categories of the engineering sector (housing, commercial and civil engineering). Meanwhile, manufacturing managed to reverse the contraction it suffered in November, although it didn’t quite make it into positive growth during December.

Even so, hiring intentions and business expectations remain low, with those polled expressing about the same level of caution as during the two-and-a-half-year low recorded in September. This may well be to the advantage of the jobbing contractor, however, as businesses may prefer hiring skilled temporary workers to deal with specific projects rather than risk appointing permanent staff while economic conditions still look so choppy.

Markit’s chief economist, Chris Williamson, said:

“Service sector companies reported surprisingly buoyant business conditions in December, with activity and new business growing at the strongest rates since July. The December survey rounds off a reasonable fourth quarter for the service sector, which is likely to again provide the main stimulus to overall economic growth.”

It’s no secret that IT contracting took a mauling in the financial sector during 2011 (permanent IT posts have also suffered) but, thankfully, the IT skills market is bigger than banking alone; jobbing PAYE umbrella techies will have plenty of opportunities in 2012 to move on to pastures new; perhaps especially in the burgeoning field of mobile platforms for e-commerce.

The Centre for Retail Research predicts that at least a quarter of all online purchases will be made using mobile devices by 2015. An indicator of the rise of mobile commerce was evidenced by the eBay subsidiary PayPal on ‘Cyber Monday’ in the US last year: three times as many people used their mobiles on this day in November 2011 as they did the previous year. One customer even used a mobile to purchase a Ferrari from an internet auction site for a cool £70,000.

‘Mobile wallets’ are gathering pace with more and more people treating them as a trusted method of payment. Mobile phones are also being used for payments and may ultimately overtake credit cards, and increasing numbers of people are using them to scan barcodes in order to make price comparisons before purchase. After its grand opening in the US last summer, Google Wallet will be launched in the UK in 2012, making it the first European country to use the technology.

IT contractors who can turn their hand to mobile-based e-commerce, it seems, are likely to be in for a very busy year in 2012: with trends like this taking off, you can bet that more companies in the UK will be scrambling to climb aboard the m-commerce bandwagon.

We’ve recently reported on a number of surveys suggesting that IT contracting in the UK is in rude health despite the grim economic climate. Now Reed Recruitment has joined the optimistic chorus, with its senior divisional director, Andrew Gardner, predicting that freelancers in the IT skills market will continue to enjoy high demand in Q1 of 2012.

In fact, in news that will bring cheer to PAYE umbrella contractors in all sectors, he noted that demand for contract roles has been rising “across the board.” Mr Gardner believes that the trend will continue into the New Year, as employers remain “nervous” about appointing permanent staff to undertake new projects.

While he doesn’t foresee a boom in the contractor jobs market any time soon, he thinks that demand will remain strong, especially with respect to IT contractors. “Businesses almost can’t do without IT now,” he said, adding “It’s not an optional service.”

Retailers in particular are likely to enhance their Web capability after Christmas; they tend not to interfere with their systems during December because it is such a crucial period for them.

Given that both IT contractor roles and permanent jobs have been falling in financial services recently (unsurprisingly, given the joint effects of the economic gloom and the reforms the government is forcing on the sector), the uptake of contractors in other sectors is a welcome development. However, employers are being more meticulous in their selection; candidates have traditionally undergone three interviews before clinching the post but today, Gardner noted, they’re being grilled more frequently.

In a ruling that may leave PAYE umbrella contractors breathing a sigh of relief that they don’t have to worry about IR35 investigations, a freelance contractor has been deemed to have worked both inside and outside the much-disliked legislation. The judge’s decision will leave many freelancers who work through their own limited companies carefully scrutinizing their contracts at renewal and extensions stages in particular.

IT contractor John Spencer worked through his limited company JLJ supplying services to a firm called Allianz for seven years. Unfortunately for him he came to the attention of HMRC, whose review concluded that he owed no less than £141,000 in unpaid income tax, National Insurance Contributions and penalties. The Revenue maintained that he was covered by IR35 throughout the time he worked for Allianz.

Mr Spencer appealed, and the outcome was the split decision at the recent Bristol Tribunal. Judge Howard Nolan ruled that for the first three years of his work with the firm, Mr Spencer was not inside IR35. However, the nature of his relationship with the company then changed, and he moved from completing specific projects to fulfilling anything the client requested of him. At this point, the judge maintained, Mr Spencer took on the characteristics of an employee. Despite this switchover, the judge conceded that it was “not easy to define” the precise point at which Mr Spencer’s role changed.

The ruling has halved the amount of money he would have been forced to part with had HMRC’s case been upheld, but has nonetheless highlighted the need for limited company freelancers to take great care over confining the terms of their contracts to specific projects.

A new Commission has been launched by the Recruitment and Employment Confederation with the express purpose of increasing the profile of skilled flexible workers, such as PAYE umbrella contractors, in government circles.

The Flexible Work Commission will be chaired by the former DG of the British Chambers of Commerce, David Frost CBE, and will provide practical proposals for the government on re-energising the market in flexible labour. A central part of the Commission’s remit is to promote the use amongst employers of skilled experts working through umbrella companies to help them tap into the skills they require rapidly and increase their productivity.

Commenting on the Commission, David Frost CBE said:

“Our flexible labour market is seen as one of the UK’s major competitive advantages. Quantifying the benefits to business and workers and identifying ways of enhancing this flexibility are the core aims of the Commission. This initiative will not only drive forward the political debate, but will also develop practical solutions for employers on maximizing the benefits of flexible working arrangements.”

Kevin Green, the REC’s Chief Executive, added “In the current economic climate, companies need to consider how best to organise their workforce in order to compete and bring the right skills into the business. The flexible staffing solutions developed by employers and recruiters will help UK businesses respond quickly to new opportunities. The Commission will take stock of the latest trends and innovations and will lead the debate on how Government can best ensure that, post-AWR, the UK continues to benefits from a dynamic and flexible labour market.”

The first meeting of the Commission is scheduled for January 2012.

PAYE umbrella contactors specializing in the IT skills market may be relieved to hear that the Agency Workers Regulations, which became operative on 1^st October this year, appear to be having few discernible ill effects on ‘high end’ temporary workers such as themselves.

The Recruitment and Employment Confederation’s Technology Sector Group has been meeting recently with the Interim Management Association (IMA) to monitor the impact of the AWR on the higher end of the contractor/temporary worker market. The verdict so far appears to be that the effects of AWR have been more limited than feared, although significant misconceptions are still prevalent amongst a minority of employers.

Even so, the overall view seems to be that highly skilled professionals, such as experts in IT contracting, are not being adversely affected by the regulations. In particular, the use of the Swedish Derogation model in sectors like IT appears to be helping employers retain highly skilled professionals by keeping them on the books of a single agency rather than having them work through several different providers.

The REC’s Director of Policy and Professional Services, Tom Hadley, said of his organisation’s discussions with recruiters:

“It is encouraging to see that the regulations are having little or no impact so far at the higher end of the market. However, we must not take this for granted and must continue to raise awareness amongst client organisations of what the regulations mean and do not mean. The demand for contractors and interim managers remains strong despite the AWR coming into force in October and we will continue to monitor the situation as we approach the first 12 week milestone.”

A new survey from Manpower makes grim reading for people seeking permanent posts in 2012, with the vast majority of employers declaring that they will not hire new staff during the next quarter.

PAYE umbrella contractors may, paradoxically, have less to worry about – UK firms may well start approaching umbrella companies and other sources of skilled freelancers in order to fulfil essential business projects whilst keeping permanent headcounts down. For the rest of the jobs market, the landscape looks decidedly bleak.

An indicator of how things have gone during 2011 can be found in the finance and business services sector. At the start of the year, they were the most optimistic sector of the economy; by year’s end, they have nose-dived to become one of the gloomiest. They are not alone: eight out of ten of the 2,100 employers surveyed said that they would not be recruiting during the first quarter of 2012. Those remaining balance each other out to a zero sum – employers planning to hire equal those planning to shed staff.

The famous north-south divide appears to have been replaced by an east-west alternative, with employers in eastern England appreciably more optimistic about hiring prospects than their counterparts in western England, Wales and Northern Ireland, who appear to be in the depths of pessimism.

Mark Cahill, Manpower’s MD, said  “[W]e see a number of business sectors battening down the hatches, holding on to existing levels of staff and not hiring with any great enthusiasm. Employers have now adopted a wait-and-see approach to hiring; they are cautious about the economy and the fear of a euro-wide contagion is weighing heavily on their minds.”

Jobbing PAYE umbrella contractors on the lookout for new work may wish to take a closer look at the online jobs market, according to new figures released by the internet jobs leviathan Elance.

Freelance software developers and others in the IT skills market are amongst those receiving a little seasonal cheer from the online jobs platform. The company’s annual figures have just been released and reveal the number of employers who sourced their temporary staff online has more than doubled during 2011, with every indication that the same will occur in 2012.

650,000 additional temporary jobs and contracts were posted on the website during 2011, a rise of 120% on 2010. It’s a figure that is well on course to double next year.

Elance Chief Executive Fabio Rosati said that the figures herald a “structural change in traditional employment.” Significantly more employers are turning to online and contingent work “as a core business strategy,” he added. Eight out of ten SMEs polled by Elance say they will hire up to half of their new appointees as freelancers sourced online. The shift away from traditional patterns of permanent 9-to-5 posts will also interest contractor’s working through umbrella companies.

Experts in the field of IT contracting will be interested to find that software roles (especially those concerning HTML 5) showed particularly strong growth, although internet marketing jobs rose by 132% and graphic design roles by 176%. Content writing, too, enjoyed a surge, rising by 72%. Perhaps reflecting the increasing popularity of Facebook and Twitter, demand for marketing comms contractors also rose by 53%.