PayMatters and Agency Workers Regulations (AWR)

31 May 2011

The Agency Workers Regulations (AWR) come into force on 1st October 2011 and these put added burden on the requirements of people employing agency workers. This affects the end client where the contractor is working, the recruitment agency who places the contractor and any umbrella company if the contractor is being employed through them.

The good news is that by working with PayMatters we can help take away some of this burden.

PayMatters are an owner-managed business which means we can act quickly to adapt our business model to suit changing circumstances. This means that although no-one seems 100% clear on the best route forward at this time we will be constantly reviewing the market place and will be quick and amongst the first to adapt if needs be.

We can advise and help contractors wishing to operate through their own limited companies. Where they are genuinely in business on their own account this then pits the contractor outside the scope of AWR.

Our initial thoughts though are that the way forward is to continue as is but for PayMatters to help with the policing of contracts. We believe most contractors are offered a competitive pay rate and therefore the AWR should have limited effect on the majority of contractors.

This is the Fully Compliant Solution.

In respect of us helping to police AWR what this means is that before we accept a new contractor to our employment we will ensure that the rate of pay being offered is acceptable in relation to comparable employees also working for the end client. We will also ensure that the end client is responsible for ensuring that the burden is on them to treat our contractor equally in the work place in line with their own employees.

In respect of the Swedish Derogation Model there is a cost in supplying this model but where a large end client insists upon this then PayMatters do have a workable solution.

The Swedish Derogation is not ideal in every case as in the majoirty of cases it only works if funds are held back from the contractor to cover the additional risk/cost of paying them between assignments. Knowing contractors they want to be paid what they've earnt as soon as possible and not for this to be put aside to pay them at some time in the future should a gap in assignments occur.

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.

As we have said above 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.

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. We perform a review for all new contractors to advise if this is their best and most appropriate solution.

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