It may strike many as ironic that legislation aimed at protecting the rights of agency workers could rebound adversely on contractors working through umbrella companies. Yet this is the likely outcome of the Agency Workers Regulations (AWR), due to come into effect next October, unless urgent attention is given now to tightening the guidance.
The new collation government disappointed many who had hoped it would fight to modify the AWR, which was endorsed by the previous Labour administration in the face of vociferous criticism from umbrella company representatives. The available timescale for the new EU directive has turned out to be too tight for the incoming government to make any significant alterations, a development which has prompted John Brazier, Managing Director of the Professional Contractors Group (PCG) to make a strong plea to the new administration. There is, he says, a “desperate need” for clearly defined rules distinguishing between employed and self-employed status. As things stand, many amongst the UK’s 1.4 million contractors could face a “bureaucratic quagmire” – only those working through their own Limited Companies are designated presently as genuinely self-employed, a lack of nuance which could easily result in large numbers of umbrella company workers being bound by protections they neither want nor need.
Although aimed at safeguarding the interests of often unskilled temporary agency workers vulnerable to exploitation, the regulations take no account of highly skilled professionals who have chosen to work flexibly and may have the effect of diminishing, not enhancing, their job prospects as clients recoil from the extra costs of the obligatory employment protections.