Less reputable companies will ‘take the money’ and ‘disappear into thin air’, says Lewis
7 February 2014
Less reputable staffing companies and intermediaries are the likely winners in the short term as government proposals to clamp down on false self-employment take effect, according to Frances Lewis, a consultant at law firm Osborne Clarke.
Fri, 7 Feb 2014
Less reputable staffing companies and intermediaries are the likely winners in the short term as government proposals to clamp down on false self-employment take effect, according to Frances Lewis, a consultant at law firm Osborne Clarke.
The government’s proposals aim to clamp down on false self-employment by making the recruitment agency liable for a worker’s tax and National Insurance (NI) unless the agency can show that the worker is genuinely self-employed.
The consultation period during which interested parties could make their views known ended earlier this week [4 Feb].
Introducing speakers at an event attended by recruiters in London last night, which included discussion of the government’s proposals on onshore intermediaries, Lewis predicted that the legislation that is due to be implemented on 6 April would “impact on different industries in different ways”. And she highlighted construction as one sector where there is likely to be a significant effect.
“In the short term the less reputable agencies and intermediaries are going to gain out of this, and particularly those operating in construction. They will set up overnight, take the money while they can and then disappear into thin air,” said Lewis.
The effect of workers inappropriately identifying themselves as self-employed is they increase their take-home pay. Referring to construction workers, Lewes continued: “Fifty pence an hour in their pay makes a big difference to them, so are they going to go with a compliant or a non-complaint option? We are going to see a lot of challenges around this.”
Yesterday Tom Hadley, director of policy and professional services at the Recruitment & Employment Confederation (REC), also highlighted the effects of the onshore intermediary legislation on the construction sector.
Speaking to recruiter.co.uk, he warned that the proposals, if unchanged, could have a negative impact on jobs in the short term as a result of workers who were previously classed as self-employed having to be paid as PAYE workers. “You might have a construction firm who says ‘I will only employ two people rather than three because I have to pay them as PAYE and not self-employed and this adds to 20% to my costs’,” he says.
Trade bodies have complained that the government’s proposals are unfair on staffing companies, because while they bear the liability for a worker’s tax and National Insurance, in many cases they don’t have sufficient information and knowledge of the worker’s payment arrangements to be able to prove they are genuinely self-employed, as these arrangements are often the responsibility of an intermediary such as a payroll provider.
The government’s proposals aim to clamp down on false self-employment by making the recruitment agency liable for a worker’s tax and National Insurance (NI) unless the agency can show that the worker is genuinely self-employed.
The consultation period during which interested parties could make their views known ended earlier this week [4 Feb].
Introducing speakers at an event attended by recruiters in London last night, which included discussion of the government’s proposals on onshore intermediaries, Lewis predicted that the legislation that is due to be implemented on 6 April would “impact on different industries in different ways”. And she highlighted construction as one sector where there is likely to be a significant effect.
“In the short term the less reputable agencies and intermediaries are going to gain out of this, and particularly those operating in construction. They will set up overnight, take the money while they can and then disappear into thin air,” said Lewis.
The effect of workers inappropriately identifying themselves as self-employed is they increase their take-home pay. Referring to construction workers, Lewes continued: “Fifty pence an hour in their pay makes a big difference to them, so are they going to go with a compliant or a non-complaint option? We are going to see a lot of challenges around this.”
Yesterday Tom Hadley, director of policy and professional services at the Recruitment & Employment Confederation (REC), also highlighted the effects of the onshore intermediary legislation on the construction sector.
Speaking to recruiter.co.uk, he warned that the proposals, if unchanged, could have a negative impact on jobs in the short term as a result of workers who were previously classed as self-employed having to be paid as PAYE workers. “You might have a construction firm who says ‘I will only employ two people rather than three because I have to pay them as PAYE and not self-employed and this adds to 20% to my costs’,” he says.
Trade bodies have complained that the government’s proposals are unfair on staffing companies, because while they bear the liability for a worker’s tax and National Insurance, in many cases they don’t have sufficient information and knowledge of the worker’s payment arrangements to be able to prove they are genuinely self-employed, as these arrangements are often the responsibility of an intermediary such as a payroll provider.
