Do limited company contractors fall within the scope of the Agency Workers Regulations?
Posted May 13, 2011
The final Agency Workers guidance for employers and recruiters published this week states that contractors who are 'in business on their own account' should fall outside the scope of the new rules when they come into play on 1st October 2011.
Over the past few years, conflicting reports have emerged over whether or not limited company contractors will fall within the scope of the new regulations.
This appears to be a direct result of the ambiguity of the guidance provided to date.
The final guidance attempts to provide more clarity over which workers fall within scope, and what impact the rules will have on agency workers, 'temporary work agencies', and clients.
The aim of the Regulations is to provide temporary workers with the same fundamental employment rights and working conditions as permanent staff after 12 weeks on an assignment.
The documentation states that the 'agency worker' definition excludes those who are in a "profession or business undertaking carried out by the individual" where the hirer is a client of customer of the individual, i.e. where a real business to business relationship exists.
The guidance also warns against individuals using limited companies for tax reasons, stating that individuals will not be able to remove themselves from the scope of the Regulations by simply working via a limited company.
Essentially, contractors who are 'self employed' as per the HMRC definition of the term, should be excluded from the AWR, as they would be from the IR35 rules.
If a dispute arises as to whether or not a contractor should be governed by the AWR or not, the Courts will ultimately decide the employment status of the worker based on the relationships which exist between all parties involved.
Umbrella company contractors, on the other hand, are classified as 'agency workers'. How umbrella schemes plan to mitigate the impact of the Regulations on contractors and clients alike remains to be seen, although the Swedish derogation model may offer a possible solution.
To read the final guidance, and further notes, visit The Department of BIS news release.
Contractor Services
- Professional Indemnity Insurance - Essential cover from Hiscox
- Helix Management Ltd - Up to 90% retention. Same day payments.
- Contract Experts - ClearSky Accounting on 08000 325 326
- InTouch Contractor Accounting - personal service & clear advice
- Parasol - the UK's favourite umbrella company
- Umbrella Company - 12,000 contractors can't be wrong!
- Together we're stronger! - Join PCG, representing contractors
- Cloud 9 Group - Umbrella Solutions only £27.50 per week
- Qdos - IR35 experts - Providers of low cost contractor insurance
- K & B Accountancy Group - Fixed fee contractor accounting only £75pm
- Free IR35 & Tax Review - Call ICS on 0800 195 3750
Related Articles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
