Temporary Workers Directive - "high end" contractors likely to be unaffected

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Temporary Workers Directive - "high end" contractors likely to be unaffected

Published on Sep 22, 2008

A leading accountant says that "high-end" contractors are unlikely to be seriously affected by the planned EU Temporary Workers Directive, even if they come within its remit.

Barry Roback, Chief Executive of IT contractor accountants JSA said:

"This proposed legislation may well prove of benefit to lower paid temporary workers, but at the top end it is likely to add yet more complexity to employment law" says Roback who is also an active member of the SPA Group, an independent organisation that campaigns on behalf of contractors, adding, "Everyone involved with the contracting industry badly needs a rest from legislation but Brussels seems determined to keep the momentum going."

The Directive, currently being finalised in Brussels, aims to give temps most of the rights that their permanent colleagues currently are entitled to. Roback believes that, those working under a limited company regime will probably be excluded, as it would be illogical to impose 'workers' rights' on those who do not work within someone else's organisation in the first place.

However, highly paid contractors who work under an umbrella company, may well be included with the proposed legislation, even though the majority are already paid considerably more than their permanent counterparts.

Roback adds a caveat: "There is possible legislation on the horizon to limit umbrella travel expenses and all this supposes that umbrella companies remain in existence by the time the proposed legislation hits the UK statute book."

Anne Fairweather, Head of Public Policy at REC, does not anticipate problems with limited company contractors, but believes there are a number of issues relating to umbrella companies that need clarifying. For example, if a matter is considered a worker right, then an umbrella which acts as an employer, could end up with some liabilities.

While she does not think that there is any specific reason for end-users to be discouraged from using contractors, she thinks that there may well be some psychological resistance in that they may feel that any new employment rights legislation could create bureaucratic problems and potential risks. That is why REC is carrying out extensive work to ensure relevant organisations understand they have nothing to fear.

Roback concludes that, "the proposed directive should not prove a serious hazard to high-end contractors but he suspects that, like all legislation, there will be unanticipated costs and consequences that could effect the profitability of agencies, the payroll costs of end-users and the take-home pay of contractors."