Agency News:

Umbrella news for agencies and recruiters

With permanent job vacancies at their lowest levels since records began, temporary positions are fast becoming the norm. But it’s not all plain sailing for agencies or workers.

In this significant downturn, short-term contracts are a lifeline for workers and employers alike. In tough times, companies need the flexibility to adjust their workforce to changing levels of business, so would like fewer people on the permanent payroll. Workers may operate under different contracts appropriate to each work assignment, but will always want to maximise the money they take home. These are matters of survival. And when the country starts to climb out of recession, as it surely will, then businesses will need fast and flexible access to labour to meet rising business demands.

Navigating through the legislation

Beneath these simple truths are the complex undercurrents of employment legislation—introduced with the aim of eradicating ‘bogus’ self-employment. Compliance is increasingly under scrutiny, with the Government recently stating its intention to crack down on non-compliant operations.

While all businesses operating legitimately in this field would applaud any moves to target companies that deliberately avoid compliance, many would admit that it can be hard for agencies, contractors, and service providers to navigate the right channel for every worker’s situation. Even those with the best intentions can make a mistake. Because of this, it’s important to work with a provider who understands the legislation and has compliant procedures that protect agencies, end-clients, and contractors from risk.

Legislation that came into force in 2007 largely removed any financial benefit for temporary workers being paid through Managed Service Companies. As a result, many individuals working on temporary or short-term contracts decided to become self-employed. However, legally, this is not something the individual can simply decide—genuine self-employment depends on many factors, and HMRC’s criteria for self-employment are strict. If the individual is wrongly classified, the ‘deemed’ employer could face a demand for extra NI and PAYE (and penalties and interest?).

The onus is on the engaging party to establish the employment status of every worker for each work assignment. We lift this time-consuming task from agencies and contractors by designing it into our everyday procedures. For each specific assignment, we consider HMRC guidelines for self-employment in discussion with the worker, and advise whether he or she appears to meet the criteria or not.

Gabem pays thousands of individuals every week, and remits the appropriate NI, PAYE and/or tax-on-account to HMRC. At every step, our aim is to avoid risk for every link in the employment chain—from the worker to the agency or contractor, and to the end-client.

Based on expert advice

In addition to our long-standing Umbrella service for contract workers, we have recently launched two new options for the self-employed—Gabem CIS for those self-employed in construction operations, and Gabem Solo for those self-employed in other industries. An extra advantage of our structure is that an individual who is unable to qualify as self-employed on a particular assignment can decide to opt into the Gabem Umbrella option as an employee and to benefit from being able to claim certain work-related expenses.

We have invested much time and money in developing these options—working closely with expert advisers in leading legal and commercial accountancy firms to make sure that the contracts we offer, and the procedures that support them, are fully compliant. Our aim is to provide a safe haven for temporary workers, agencies and other employing organisations looking for the peace of mind of working with a compliant provider. We are confident that this is the case.