Agency Workers Regulations and Umbrella Companies

29 April 2011

At PayMatters we are open to all options to address the Agency Workers Regulations (AWR) to ensure contractors working through our umbrella company have at least parity with permanent staff performing the same role at the same client.

We will make a final decision to be announced here once final guidance has been issued and assessed hopefully by the end of next month (May 2011).

In reality we don't think legislation will affect a lot of contractors but we accept that we are one of the 3 businesses that need to ensure we don't fall foul (the others being the recruitment agency and the end client). Contractors are only caught if there is a comparable role and the contractor is being paid less than this comparable role.

To help recruiters and end clients assess the risks for all new starters we will be preparing comparative illustrations of a contractor's expected net pay through our umbrella compared to similar permanent staff (if they exist) for all new referrals. This will help highlight any new referrals where AWR has to be considered. Once flagged discussions can take place with the agency and the end client to see how any shortfall can be rectified. Like we said before we would expect the number of issues to be small since contractors are normally paid a competitive rate to reflect the short-term nature of their work.

We will consider the Swedish Derogation (or full employment model) but at this stage think to opt for this may not be necessary given the number of contractors who may be affected and are not sure this what contractors really want. There are also issues regarding how the cost of funding contractor pay between assignments would be funded. Others have also raised concerns that this could be open to abuse and seen as avoidance of the legislation.

For recruiters remember that by referring to PayMatters Umbrella Company you are mitigating any risk by introducing a 3rd Party to the equation. We will also monitor to identify any potential issues before the role is finalised.

Provided that the Umbrella Company and Recruitment Agency act fairly in monitoring the situation we believe the main onus is on the end client to pay a fair rate and offer comparable working conditions.

We also offer a limited company route through PayMatters Accountancy Services LLP which is outside the scope of AWR.

The Agency Workers Regulations come into force from 1st October 2011 but contractors then need to work for a period of 12 weeks (earliest date being 24th December 2011) before they could make a claim for equal pay and holiday entitlements.

If you would like more information regarding PayMatters please call one of our advisors on 0800 121 6513.