News

Employment Agency Standards (EAS) is responsible for the enforcement of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (‘Conduct Regs’), and has reported an increase in complaints. Are you compliant with key elements of the regulations, and how would your business fair if inspected?

Victoria Atkins, Financial Secretary to the Treasury, issued a written ministerial statement yesterday announcing a consultation on policy options to regulate umbrella companies and to tackle non-compliance in the market. This is amongst other objectives to ‘simplify’ and ‘modernise’ the tax system, with the intention to make the system fairer for taxpayers, work better for traders and challenge non-compliance.

Supplying temporary workers has always been a minefield in terms of compliance, and since the IR35 rules changed in April 2021 this has become even more complex. Two years on, and businesses are still grappling with whether to take the risk of IR35 or avoid IR35 altogether by engaging the agency workers directly or via an umbrella company.

In May 2008 we reported on the Court of Appeal case of James v Greenwich. This case set the tone thereafter as the Appeal Court clarified in summary that agency workers will not normally be regarded as implied employees of the hirer unless they work in a way not reflected in the worker’s agreement with the agency. Both hirers and agencies have relied on this case ever since.

The First-tier Tax Tribunal decided that Mr. Lineker had a direct contract with the BBC and BT Sport and therefore the IR35 rules do not apply. On the face of it this seems a bizarre outcome since Mr. Lineker had, and operated through, a partnership with his former wife. Any student of IR35 will know that IR35 is the common name used to refer to the ‘Intermediaries legislation’ – addressing tax avoidance through the use of intermediaries and that a partnership is stated to be an intermediary. Further where there is a contract between the client and an intermediary for the personal services of the individual, Mr. Lineker in this case, the IR35 rules apply so requiring a hypothetical employment status assessment of the individual to client relationship. So how did the tribunal reach its conclusion?

The Association of Recruitment Consultancies (ARC) has commented on the budget as follows:

Commenting on the latest budget statement, Adrian Marlowe, Chairman of the Association, said: “The Chancellor’s statement on 16th March is largely to be welcomed. In particular we welcome all the measures to bring more people into work, whether younger or older, not only given the scale of the labour shortages in the UK but also for our collective social well being. This should benefit the employment sector as well as those currently out of work.

For many years recruitment businesses have supplied company contractors to their clients and in many cases have obtained opt outs from them. This has meant that both the agency regulations and tax obligations on supplying businesses were largely irrelevant. Inevitably understanding those regulations and others, such as the Agency Worker Regulations, has not been seen as important.

The debate regarding holiday pay continues as a consultation is launched with regard to the calculation of holiday entitlement for workers with irregular hours and pay.

As indicated in our last article on holiday pay accrual, the issue facing umbrella companies is to do with use of overarching contracts that continue employment in between assignments.

Since the case of Harpur Trust v Brazel which we reported on in our article here, umbrella companies have been concerned about holiday pay accruing during periods when their employee contractors are in between assignments. Where do the funds come from to meet the cost?

It may seem confusing, trying to navigate the government website looking for updates on remote right to work checks. You would be correct in thinking that changes to ‘Right to work checks’ have been introduced, but what are they…

The government has presented a new bill focused on scrapping all EU drive labour rules by December 2023. This is in The Retained EU Law (Revocation and Reform) Bill which was published last week. It will automatically repeal any retained EU law as of 31st December 2023 unless specific legislation is introduced to retain it. For the potential chopping block therefore are…