Umbrella companies may well have sensed their ranks swelling last month, according to figures recently released by the recruiter firm de Poel, which showed a ten per cent increase in the number of temporary workers used by UK businesses. A proportion of these will have been PAYE umbrella contractors.
In an interview with Recruiter magazine, de Poel’s Chief Executive, Matthew Sanders, said that the data indicates continuing wariness amongst UK businesses about hiring permanent staff. Temporary workers, he went on, provide a “brilliant solution” to business fluctuations. There is undoubtedly a real need for short-term labour.
A rather less upbeat assessment, however, came from Forum of Private Businesses spokesman Chris Gorman, who said that most of the people who left full-time jobs through redundancy and accepted temporary posts “are not going to be creating wealth or jobs and helping us out of the economic doldrums.” He was taking issue with the assumption that a rise in temporary jobs signalled a surge in entrepreneurship, although he conceded that a proportion of them would have the drive and determination to set up small businesses.
The Financial Mail has speculated that some of the new temporary workers are actually staff made redundant who then returned to work for the same employer for fewer hours as a freelancer or contractor, sparking concerns about IR35. However, even if former permies are returning to the same company as temporary workers, they could well use the experience as a launch pad to becoming contractors and working through umbrella companies as a new career. If so, this is no bad thing – and they’re unlikely to want to return to permanent employment anyway.