In my last blog post I discussed the impending Agency Workers Regulations (AWR) and what their impact could be for the UK’s interim and freelance accountancy professionals. We’ve now had the Department for Business Innovation and Skills (BIS) publish its guidance notes on the new legislation and the picture has become a lot clearer.
As experienced freelancers in the accountancy world will know, the temporary worker industry is one that has experienced a lot of legislative change over the last 10 years and correctly structured support service providers, i.e. specialist freelance accountants and umbrella companies, have adapted and thrived. Good service providers talk about working within new legislation, not around it, and the AWR will be no different; this is good news for the thousands of freelance accountancy and finance professionals that rely on them to ensure they are running their businesses compliantly.
In fact, most ‘good’ umbrella company business models are eight tenths of the way to being a compliant solution to the AWR already. These are the umbrellas that have a robust contract of employment in place with the freelancers who use their services and who demonstrably behave as a true employer should. The less scrupulous providers (that do exist out there) will really struggle with this as their contracts of employment have no basis in case law and their attitudes to compliance are ‘relaxed’, to say the least.
Freelance finance professionals who are paid via their agency’s PAYE are going to see some significant changes and it’s worthwhile looking at the alternative options open to them. Make sure you aren’t missing out on some of the additional benefits available to temps and freelancers as a result of the AWR.
All change?
The AWR is not as daunting as some commentators have alluded to and it does provide opportunities for freelancers to work with umbrella companies and benefit from additional perks.
For career freelancers, a model based on ‘full employment’ is the answer. This would involve the agency worker being employed by the umbrella company on a permanent basis with the umbrella company providing pay between assignments, holidays and pensions. The umbrella will also work with the recruitment agency partners to help you find your next assignment and you will still have your existing right to claim legitimate business expenses to boost your take-home pay – not something that will necessarily be offered by the alternatives.
What is the full employment model?
The full employment model takes elements from what has become known as the Swedish Derogation – a fancy-sounding name for a clause negotiated by the Swedish delegation when the Agency Workers Directive was debated at EU level. To put it simply, it means that the AWR rights to equal pay of an agency worker no longer exist when agency workers are employed on a permanent basis by their umbrella company or temporary work agency and receive pay in-between assignments. Under these circumstances, the protection afforded by the AWR becomes superfluous as the worker is already protected as a full employee.
However, there are conditions to this, with the first one being that the agency worker needs to be genuinely employed by the umbrella company or agency with a permanent contract of employment in place, and that the contract was entered into before the beginning of the worker’s first assignment.
There are some conditions to this though that you need to be aware of. Ask your agency or service provider if they will:
- Pay you during non-working periods when you are between assignments
- Take reasonable steps to help you find your next assignment
- Make sure that any suitable available work is offered to you
- Pay you a “minimum amount” for an aggregated period of not less than 4 calendar weeks (subject to national minimum wage)
- The “minimum amount” must be at least 50% of your pay from your previous assignment. However, it cannot be less than the national minimum wage
We are almost there
In recent years, correctly structured umbrella companies have transformed themselves into risk mitigation employment businesses, using robust over-arching contracts of employment with contractors to mitigate the risks faced by hirers and freelancers alike. It means that ‘good’ umbrella companies are taking full responsibility for freelancers’ employment rights and the associated risks, all of which have been polarised by the AWR.
From this position, for many umbrella companies, it’s become their responsibility to develop the solution to the AWR and as a result, the ‘true’ umbrella companies are not far off becoming a compliant post-AWR business model. This is where the ‘full employment’ model comes in.
As a result, ‘umbrella company’ is a phrase that is likely to become redundant, replaced by phrases such as ‘outsourced employment services provider’, for example, but for freelancers, recruiters and their end-clients this is good news. As long as the freelancer has a robust contract of employment in place with their umbrella that meets all of the above requirements, then all of the responsibilities regarding pay that come with the introduction of the AWR lie with the umbrella. Should a tribunal ever come about, it will be the umbrella that the tribunal is brought against.
Freelance accountancy and finance professionals will, however, need to conduct due diligence to ensure that the agencies and umbrella companies they are working with are applying the ‘full employment’ model correctly and have the financial strength to ensure they can pay you if you find yourself without an assignment. A good place to start is the membership of FCSA.
Rob Crossland is the Chief executive of the Parasol family of companies, which also includes ClearSky Accounting, and provides umbrella PAYE services to over 9,000 freelancers in the UK.
Comments