Umbrella Companies and Agency Workers Regulations (AWR)

2 September 2011

As the effective start date for AWR (1st October 2011) gets closer the Umbrella Company industry, along with end clients and recruitment agencies, appears to be favouring the Fully Compliant Umbrella Model in respect of adhering to the new regulations.

Initially there was some speculation that various funding models would be used so that Umbrella Companies could offer the Swedish Derogation Model meaning that the end client and recruitment agencies could be outside the scope of AWR.

It is now generally agreed that it would be wrong for the contractor to fund these schemes especially as their validity could be challenged. To adopt this approach could therefore create a potential liability for the parties involved with fines being applied for avoidance of the spirit of the regulations.

The only Swedish Derogation Model that PayMatters will therefore be offering is where the cost of paying the employee during a gap after the first assignment is funded by the end client client/recruitment agency/umbrella company.

We therefore see that the majority of contractors will therefore be employed through our fully compliant umbrella company.

With this model we will help ensure that any contractor receives comparable terms to their fully employed comparative worker. This is therefore good news for the contractor and will help mitigate any potential for claims against the end client or recruitment agency.

We will also still be offering the own limited company solution where applicable. This solution can put the contractor outside the scope of AWR.

For further information on AWR please do not hesitate in calling PayMatters on 0800 121 6513.