Most common myths about the Agency Workers Regulations
Posted Feb 21, 2012
The PCG has published its 5 most-heard myths about the AWR, reflecting the lack of clarity and transparency which exists in the marketplace, due in no small amount to the inadequacy of the official guidance.
Myth 1 - All contractors must now use an umbrella company
This is untrue. If a contractor has a genuine business relationship with a client, they can successfully work through there own limited company. The key lies in the nature of the relationship between contractor and client.
Myth 2 - If I give all my contractors equal access to facilities, this will put them in scope of AWR
This is untrue. Providing access to facilities does not affect AWR status - many clients do this anyway to make the administration of staff easier. The PCG AWR guide explains further how to determine scope.
Myth 3 - The AWR means our contracts must transfer all liability to the contractor/include restrictive clauses
This is untrue. Recruiters are advised to be flexible, and to seek legal advice before drawing up contracts. The PCG advises recruiters to be willing to negotiate contract terms, especially in relation to IR35 and other liabilities.
Myth 4 - The AWR makes contractors more expensive
This is untrue. The contractors' organisation points out that contractors provide an excellent resource for clients, and the AWR will not impact contract rates in any way.
Myth 5 - All limited companies are in or out of scope
This is also untrue, and the source of much confusion to date. Having a limited company does not determine whether or not a contractor falls will be affected by the AWR. What determines this is the nature of the relationship between the contractor and the agency / client. Again, if the contractor has a business to business relationship, they will most likely fall outside the scope of the AWR.
Official guidance lacks clarity
Commenting on the need to debunk these myths, John Brazier, MD of the PCG said:
"Let's be very clear, the AWR itself is not intended to apply to freelance workers in business on their own account. However, the guidance lacks clarity and transparency for them and we have stepped in to supply this for freelancers, clients and agencies. This guide is therefore vital to ensure that those working with freelancers on a day-to-day basis have the confidence to conduct business as usual."
Further Resources
The PCG has a useful guide - 'Freelancers and the Agency Workers Regulations' which you can access here.
Please note that the myths described above are just for general illustrative purposes. You should refer to the guide for in-depth information on the AWR.
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