Coalition Government will not make changes to AWR due to legal situation

The head of employment policy at EEF, David Yeandle, said \”It is disappointing that the Government has not felt able to make some changes which would have made it easier for manufacturers to implement these Regulations. However, industry recognises that, if changes had been made, this could have put at risk the vitally important 12 week qualifying period before equal treatment has to apply. This would have been too serious a risk for the Government to take as retaining this key element of these Regulations will help to ensure that agency working remains a key part of the UK\’s flexible labour market.\”

What is the Agency Workers Directive?

The Agency Workers Directive is a piece of legislation designed to protect the rights of low paid agency workers. Designed by the European Community, the legislation gives agency workers the same pay, terms and conditions of employment, maternity / paternity benefits as workers who are permanent employees of a client company. These employment rights are either given:

  • As soon as the agency worker starts working for the client, OR
  • After a certain length of time known as the ‘derogation period’ (agreed to be 12 weeks by the CBI, TUC and the prior Labour Government).

How will the Agency Workers Directive affect Highly Skilled Contractors?

Obviously the AWD has been a big concern for many highly skilled contractors who benefit significantly from their independence and are not interested in gaining the same employment rights as perm employees after 12 weeks. In particular those contractors operating Contractor Limited Companies outside the scope of the IR35 legislation stood to lose the most, due to the fact that they would lose the ability to take income in the form of profits and thereby saving significant amounts in National Insurance Contributions.

Thankfully at least, when the draft regulations were released they excluded those:

  • Working as Self Employed
  • Operating a Contractor Limited Company
  • Employed on Managed Service Contracts

Therefore, at present, when the Agency Workers Directive comes into place those operating a Contractor Limited Company outside the scope of IR35 will not be affected by the legislation. However, those individuals using an Umbrella Company will gain the same employment rights as perm workers after 12 weeks. This could spell the end of Umbrella Companies as we know them as contractors would be unable to claim business expenses associated with a temporary workplace unless all assignments were for less than 12 weeks each.

Deferred Introduction of the Agency Workers Directive

Thankfully, the introduction of the Agency Workers Directive has been deferred until October 2011, giving:

  • Industry bodies the opportunity to discuss the implementation with the Government (as the REC is doing)
  • Employment Businesses time to adjust the contractual framework of their businesses and educate their workforces on new processes and procedures, AND
  • Giving those organisations who provide services to contractors time to find possible alternatives to Umbrella Companies

Commonwealth Contractors

Commonwealth Contractors is a collection of highly skilled professionals from the Commonwealth and beyond. We partner with OISC Registered Immigration Partners capable of professionally representing a Tier 1 Visa Application / Extension and Tier 2 Licensed Consultancy & Associated Trust Partners who may be prepared, where required, to sponsor a doctor on a Tier 2 Visa (formerly UK Work Permit). Commonwealth Contractors also provides updates on UK Immigration News.

To find out more call Commonwealth Contractors now on 0330 390 9021 or Submit your Details and we will get back to you. Please be prepared to send a copy of a recent CV so that we can pass to interested partners.