European Parliament votes to get rid of opt-out

The saga continues of the so called “deal”, under which the UK’s position opposing the Agency Workers Directive (AWD) was withdrawn in exchange for agreement  for the UK to retain the 48 hour opt out under the Working Time Directive (WTD.) On 17th December the EU Parliament made a determined attempt to remove the opt out by voting for its removal – in direct conflict with the alleged agreement. This could represent another nail in the coffin of the “deal” although it is important to emphasise that the position is not yet finalised and the Directive will now have to go to a conciliation procedure to decide its future.  Let’s recap. The parties to the “deal” which was announced on 20th May 2008 we are told were the CBI, for employers, and the TUC, for workers. The deal authorised the UK to change its opposition to the AWD, a position…

Pre budget report allows employment umbrellas off

The pre budget report contained the welcome news that the government has decided not to change the tax reliefs on travel expenses, but that is not the end of the matter. Adrian Marlowe, managing director of Lawspeed, said “this news will come as a huge relief not only to umbrella companies, but also to the large number of contractors for whom tax relief is a significant factor in accepting site based work. However this will not be the end of the matter as I am informed that the government will now set up a task force with greater emphasis on compliance and dispensations”. Adrian went on to say “we are very grateful for the tremendous support that was provided for the representation. It goes to show the value in providing a cohesive and coordinated strategy, and I hope that this continues. However, it is entirely possible that economic factors played…

Government announces yet more measures – this time

The Government has today issued a new consultation – entitled “Tax relief for travel expenses: temporary workers and overarching employment contracts”. This marks the beginning of another phase in the government’s review of the agency sector. Clearly the principle, that agency workers are able, by operating through an umbrella company or agency, in either case using an overarching employment contract, to claim tax relief against travel expenses, is one that the Government would like to end. The principle is said to have been abused by both agencies and umbrellas with the consequence that the Exchequer has lost money. In addition it is argued that eligibility for tax relief for travel to and from work, which regular employees cannot set off against tax, gives agency workers an unfair advantage. However the Government indicates a need to balance a curtailment of the relief against the possibility that its removal could damage flexibility…

Agency Workers Directive – sleepwalk to disaster?

The Agency Workers Directive (AWD) has long been simmering in the background, with many believing it would never become law, especially since the Government was originally against the proposals. However, following another policy U-turn, the Government announced on the 20th May that a deal had been made with the TUC and the CBI that would give agency workers the right to equal treatment. The details of how the deal was reached were, to say the least, a little sketchy. On the 9th June the EU Council discussed the AWD proposal, with the UK now supporting the Directive. Notably on the same day the UK secured the retention of the opt-out from the 48 hour working week under the Working Time Directive, which had been under threat. This appears to be another deal behind closed doors. The BERR website states “The Government hopes that EU agreement will be obtained in time…

EU Council reaches agreement on principles of Agency Workers Directive

On the 10th June, the EU Council  agreed points of principle as to the content of the proposed Agency Workers Directive. Fundamentally it was agreed that the entitlement for agency workers to have comparable rights to regular employees of the end user shall apply from day one of an assignment in terms of pay, leave and maternity leave. However it was also agreed that member states can derogate from this period, by allowing a longer qualifying period and no upper limit was set for that qualifying period. Additional points agreed include (a)    temporary agency workers to be informed about permanent employment opportunities in the user enterprise (b)    equal access to collective facilities (canteen, child care facilities, transport service) (c)    Member States have to improve temporary agency workers access to training and child care facilities in periods BETWEEN their assignments so to increase their employability (d)    Member States have to ensure penalties for non-compliance by…

Agency Workers to get Employment Rights

Following our newsletter of 16th May 2008 the government has announced that it has agreed a deal with unions and employers that will see agency workers receiving equal treatment as employees. Equal treatment will mean the same entitlement to pay and basic working and employment conditions. The entitlement will arise after 12 weeks “in a given job”. The employers organisation that has “agreed” this deal is the CBI which has commented “There has been a major risk of damaging legislation coming from Brussels, and the CBI has judged that the government’s proposals represent the least worst outcome available for British business. Half of agency assignments will be unaffected as they last less than 12 weeks – protecting businesses’ ability to deal with peaks and troughs in demand and shorter-term staff absences. And while pay is covered, occupational benefits that recognise the long-term relationship permanent staff have with an employer, like…

Changes to Conduct Regulations & Agency Standards Enforcement

It is worth the reminder that there were two related BERR consultations in 2007 on “… measures to protect vulnerable agency workers” and “…National Minimum Wage and Employment Agency Standards Enforcement”. Following responses to the consultations, the proposed legislation was finalised and will take effect in two stages during 2008. The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2007. These regulations amend the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (“Conduct Regulations”) and introduce new provisions that are intended to better protect agency workers with effect from 6th April this year. Key changes are: Regulation 5: Where a worker decides to take up services from an agency, for example, accommodation or transport, the worker will be given a right of withdrawal from all services subject to five working days notice, or ten working days for accommodation. Regulation 21: Amendments to procedures when passing information between the client…

Case partially clarifies agency worker employment status

For many years there has been a lack of clarity as to whether an agency could have employment rights as against a hirer. More technically minded readers will know that the ruling in Dacas (2004) first really set the cat amongst the pigeons, when the Court of Appeal implied that an agency worker could be an employee under an implied (e.g. unwritten) contract. Dacas was rapidly supported by a further Court of Appeal ruling in Cable and Wireless – v- Bushaway (2005). The result was that every Employment Tribunal thereafter felt obliged to consider in every agency worker case where unfair dismissal or redundancy was claimed whether there was an implied employment contract. Bad news for recruiters supplying workers because end users rapidly became paranoid (and rightly so). Now however in the appeal hearing of James v Greenwich the Court of Appeal has clarified its position. Agency workers will not…

Who could be an MSCP?

In April 2007 the government introduced legislation to force contractors to pay employment taxes where the contractor obtains advice from managed service company providers (MSCPs). In some circumstances, this debt could be transferred to the MSCP. For an organisation to be an MSCP all that is required is for it to be in the business of promoting or facilitating the use of companies by contractors, which could catch out some agencies. For the legislation to apply the MSCP has to be “involved” with the contractor company. Being “involved” is defined to include, amongst other things, being in receipt of ongoing payments, or promoting any scheme for making good tax losses, for example tax indemnities or insurance. A contractor company caught by these rules is known as a managed service company (MSC). The legislation as currently drafted therefore exposes any company to risk of having to pay MSC employment taxes if…

HMRC Drops MSC Audit Scheme

Following representations put forward by Lawspeed, HMRC and the Treasury has abandoned the idea of introducing an audit scheme in the foreseeable future. In recent months HMRC had announced that it was considering a scheme which may allow for certain third parties to assess whether a provider organisation is compliant with the MSC legislation. However it had held back from making a quick decision despite pressure from various quarters to do so. In announcing its decision not to proceed for now, HMRC has said that it will discuss the impact with external stakeholders. Adrian Marlowe of Lawspeed said “This is a tremendous result both for umbrella companies and recruitment agencies. So far as umbrellas are concerned there were elements of the scheme that appeared to give an advantage to various providers in an unfair, and, some would say, unnecessary way. Also there were serious questions about the legality of any…