The AWR – how is it affecting our interims so far?
More than six months have passed since the introduction of the Agency Workers’ Regulations in the UK, which provide contractors working through recruitment agencies with the same entitlement to basic employment and working conditions as direct employees of the end hiring company.
At VMA Group, most of the contractors we place with our clients are professional interim managers, who have set up in business for themselves, and are paid a premium for their skills and expertise. The nature of their work tends to be project-based, with autonomy as to how specific objectives are met, rather than under the supervision and direction of a hirer – which is the key qualification for whether a worker is deemed ‘in’ or ‘out of scope’ of the AWR – although Ltd Company contractors should not be assumed to be automatically out of scope.
However, some of our contractors choose to be paid through an umbrella service (a company that provides payroll services and passes the cost on to the agency), particularly if they are freelancing between permanent jobs or working at a junior/mid-management level. These contractors automatically fall in scope of AWR and several of our clients are looking closely at this category of workers. In recent months, two organisations have told us that they will no longer accept umbrella workers, or that they will limit the contract period to 12 weeks, which is the point at which in-scope workers qualify for full benefits under AWR.
In niche, professional areas such as Communications and HR, while umbrella services remain an excellent option for freelancers or short-term contractors, setting up a Ltd Company creates more flexibility and tax efficiency for contractors working at higher day rates.
Accountancy firms that specialise in this area, such as www.tempoaccounting.com, are increasingly offering lower-cost, accessible advice and support to contractors to make the process more straightforward and cost effective, and can advise individuals as to whether the umbrella or Ltd Company route will be best for them. With clients seeking to limit their exposure under the AWR, we expect to see more contractors at the mid- to senior end of the market choosing to form their own Ltd Companies.
To discuss your options further, call VMA Group’s interim team on +44 (0)20 7436 4243
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