The recruitment industry must speak as one to get positive results regarding the apprenticeship levy and IR35, the Association of Recruitment Consultancies (ARC) has said.
“One message, one voice, new supportive legislation,” was the call from ARC Chairman Adrian Marlowe, who was speaking at ARC’s recent IR35 and Apprenticeship levy conference.
Marlowe asked recruitment companies to back ARC’s campaigns for modernisation and a new, joined-up, positive policy from the government regarding the sector.
“All staffing and contractor supply businesses have the same need for a long-term supportive legislation platform that allows flexibility and recognises the socioeconomic benefits that our important sector provides,” he said.
“All recruitment businesses therefore have a stake in achieving a better future without onerous administrative and tax requirements.”
“Recruitment businesses should be willing to assert their common position. Fragmentation and lack of support from those with different interests can only undermine efforts for improvement.”
Experts from manufacturers’ association EEF and apprenticeships provider Key Training said there was little opportunity for recruitment agencies to use the apprenticeship levy in a meaningful way.
Marlowe said that, while ARC agrees with the levy in principle, its effect on agencies and exclusion of agency workers is unfair, making the levy tantamount to a tax.
The levy, which comes into effect on 6th April, will see all organisations with payrolls of £3million and over charged 0.5 per cent of their annual pay bill.
Recruitment agencies and other employment intermediaries, such as Umbrella Companies, will have access to a digital fund that is equal to the value of their contributions, which can be spent on the development and training of apprentices.
However, many employment intermediaries work with large numbers of temporary or contract workers, who will not qualify for levy funding as they’re not usually in a single role long enough – one year and one day – to do so.
Umbrella Companies will also be unfairly affected by the levy due to their high payrolls, which are artificially inflated by large numbers of contracting professionals who work for an end client, rather than being employed in-house.
A specialist panel of recruiters at the conference provided evidence that public sector contractors are already turning down jobs due to the proposed new IR35 rules, concluding that, were this to continue, public sector costs would exponentially increase.
“This is simply madness at a time when the public sector is already fully stretched and expert staff in short supply,” said Marlowe.
He went on to say that ARC would urgently pursue the legal issues surrounding the onus being on agencies to determine IR35 tax status and Her Majesty’s Revenue & Customs’ online tool.