Crystal Umbrella

It will hardly have many PAYE umbrella contractors popping open champagne bottles but the latest REC/KPMG Report on Jobs, which is published today, does contain a few ‘glimmers of hope’ that the economy may not be heading for the knacker’s yard just yet.

Permanent staff appointments rose slightly in January, marking the first time in four months that this has happened. Salaries for permies, however, languished in January, rising only minimally, while hourly rates for contractors and temporary staff climbed again after sinking in December.

On the down side, contractors working through umbrella companies hardly experienced a jobs bonanza during the month, although the AWR-induced Armageddon that some commentators had forecast for January failed to materialise. Growth of temporary billings fell slightly, but even so demand for both permanent and contractor roles was particularly strong in IT, engineering and construction. Hotel and catering job seekers had a disappointing month, with the sector showing a marked decline in demand.

REC Chief Executive Kevin Green remarked “This month’s Report on Jobs highlights that there are glimmers of hope for the UK jobs market with permanent placements increasing for the first time in four months.” He went on to note that although temporary billings dropped slightly, they represented an improvement on December’s figure, and that “there is still little evidence that the Agency Workers Regulations have had a significant impact on hiring and employers are still making considerable use of flexible working arrangements.”

KPMG’s Head of Business Services, Bernard Brown, added “Perhaps employers are beginning to accept that they need to have the right people in place to kick start the economy?”

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 new study suggests that contractors working through umbrella companies are being increasingly sought by the UK’s SMEs, even though economic conditions remain uncertain.

The report by the international office space supplier Regus indicates that SMEs are turning to skilled PAYE umbrella contractors in an effort to remain rapidly scalable in precarious times while simultaneously hiring the staff they need to complete essential business projects.

Moreover, SMEs trading internationally are taking the lead in capitalising on flexible workers – 49% of them plan to hire freelancers, while 39% intend to hire remote workers.

Paradoxically, it seems to be the very grimness of the prevailing economic winds that has prompted the uptake of contractors and other freelancers; business confidence amongst SMEs has actually fallen by 20% since April, the report reveals, and profit and revenue growth has also been tumbling. However, SMEs trading with oversees markets show a markedly better profile than their domestic counterparts, with business confidence reaching 88% (compared to 79% for domestic firms). They’re also more likely to be reporting increasing profitability (30% compared to 20%)

Regus’ Regional Director, Celia Donne, explained, “SMEs realise that they must continue investing in growth, so freelance and remote working are becoming increasingly popular solutions to increase headcount while remaining flexible and rapidly scalable. 27% of the employed population in the UK are now deemed to be flexible workers, which illustrates the significant shift that has already taken place in the employment market.”

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.

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.

As the deadline for the implementation of the Agency Workers Regulations draws ever closer, contractors working through umbrella companies and limited companies alike may welcome the publication by the REC of a second batch of model contracts which are fully compliant with the new legislation.

The contracts are a key component of the REC’s AWR Advisor Toolkit, which was launched last week, and represent the culmination of the organisation’s efforts to help its members prepare their staff, agency payroll workers and clients for the activation of the new rules on 1^st October. The latest documents include Inside IR35 and PAYE model contracts (Contracts 3-8) as well as model contracts for the Swedish Derogation option.

The REC’s Head of Professional Services, Lewina Farrell, said that the organisation’s legal team had undertaken a “mammoth task” in updating all the model contracts to comply with AWR. “We had been working on the contracts for some considerable time to ensure they were all fit for purpose for our members. The contracts released today are for those workers who will be agency workers for the purposes of the AWR,” she explained.

With only a few weeks left before the implementation of the EU directive, forward planning has become increasingly urgent. The model documents should help all individuals and agencies affected by the legislation to move into the new, post-AWR era relatively smoothly.

Recruiters in Northern Ireland are not yet included in the latest REC publication, as the Department for Employment and Learning (DELNI) has not yet finalised its AWR guidance. As soon as it does so, Ms Farrell advised, Northern Ireland recruiters would receive their final documents from REC.

A contradictory picture has emerged in recent days about the health of the UK’s IT skills market.  According to figures in the latest “IT Monitor” report from the specialist recruiter Computer People, demand for IT workers remains consistently above the level of supply, with pay rates rising by 1.5 per cent last month.  IT contracting roles also expanded in July by 0.7 per cent – news that will be welcomed by many PAYE umbrella workers.

The report is upbeat about the future, forecasting that the healthy trend is set to continue as businesses invest in new IT projects over the next few months.  The firm suggests that a “war for IT talent” is gathering momentum, as firms endeavour to increase revenues, service “business as usual” requirements, and lower costs.  “Projects that were previously shelved are now coming back online and the addition of new projects means that both activity and demand is increasing at a steady rate,” the report concludes.

However, such an optimistic view has been complicated by another recent report that paints a rather dourer picture.  Figures compiled by another specialist recruiter, the IT Jobs Board, suggests that the UK’s IT sector is not emerging from the recession as rapidly as other European countries, with only 50 per cent of the UK’s IT workers securing pay rises last year.  69 per cent of their Dutch counterparts and 73 per cent of German IT workers saw their pay packets rise.

IT Jobs Board spokesman Peter Healy said that many UK IT workers do not believe that they will see pay rises in the foreseeable future, although they may see improvements in other benefits.