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by Rob Crossland

Stock up with tinned peaches and powdered eggs!

September 29, 2011 in AWR, Contractor News, Freelancing, Industry comment, Life, Recruiter News

It’s almost the 1st October and the end of the world is nigh! I have already sent the wife down to Morrisons to clear the shelves of tinned peaches and soup.

For those of you who have been blissfully unaware (e.g. not in recruitment or in the service industry that supports it) then 1st October sees the formal start of the Agency Workers Regulations (AWR) (and you can go here if you need the basics). In very simple terms it means a clock has started ticking, not as some might think, as precursor to doomsday but to the 12 weeks hence (24th of December!) where a vulnerable agency worker can potentially receive equal pay and conditions of a full time counterpart (if one exists). I may sound a bit cynical but the amount of work that has gone into preparing for this has been quite substantial and for the vast majority of Parasol and Clearsky users it won’t make any difference, it will be business as usual. As a very sensible and safe business we were already doing 90% of what the regulations require so most of our work has been in trying to educate and inform in a market which has very interesting views.

So the boring message is that it’s very much carry on as normal at Parasol House and Clearsky towers. We have shiny new payslips for Parasol employees and some changes in terminology but for contractors it won’t be much different. For Agencies, it’s just as dull, were open for business, a model of operation for all those interesting views and primarily a nil cost, no hassle approach to the legislation.

I suspect I will have to write some more as the dust settles in October and the first potential claims emerge (probably in Union backed environments) after December but in the meantime I shall put the peaches in the garage next to the peas that we bought in December 1999.

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by Rob Crossland

The murky world of Agency umbrellas

August 24, 2011 in Business Expenses, Contractor News, Industry comment, Recruiter News

It’s been a while since the last post and high time I wrote about the “grey market”. No, not some dodgy Apple kit, in this context it relates to a number of “Umbrella Companies” that are actually owned by recruitment businesses but pretend they aren’t.

Some are relatively overt about it and exist to perhaps serve their own contractor base and/or use group structures “imaginatively”. Others are far less so of course and also have a history of offering very high referral fees to build contractor volumes. Why would a recruitment business send it’s contractors to a potential competitor related business? I’m not saying that there any data protection breaches but is it best practice? I also believe that clearly masking the relationship tells you something, why hide something if it’s a genuine stand alone business? It is difficult to tell at times and any decent Agency would want to look at group structures and associated companies as part of preferred supplier due diligence.  I have seen Umbrella operations bring down related Agencies and vice versa. This happens as a result of one simple fact, it’s not a core focus for the Recruitment business and is a tad harder than you might imagine.

Here at good old Parasol we are quite proud of our independence and I really don’t mind competition, it keeps you sharp. I do mind a lack of transparency and practices in an industry that needs to remain friendly with our legislators. Surely we should all play to strengths and if you are an Agency boss thinking of entering this “easy” Umbrella life then give me a shout, happy to explain how and why you should to do it properly.

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by Rob Crossland

AWR – so what do we really know?

February 11, 2011 in AWR, Contractor News, Freelancing, Industry comment, Recruiter News

We at Parasol have been running an Agency Workers Regulations website for some time now and like to think we are reasonably close to developments. We work with over 2000 recruitment businesses so hear a lot about what is concerning staffing businesses big and small. We are also a founder member of the FCSA trade association whom are involved in the DBIS guidance workshops alongside the REC, CBI, TUC, APSCo and others. I’m not saying we are on the “inside”, no one is but I do like to think we are very close to the subject matter and can therefore provide a decent balanced view.

So, what do we know?

  1. Guidance will not be a silver bullet and is not law, the regulations are.
  2. Guidance will make things clearer though.
  3. The complexity of the UK flexible workforce industry is not recognised in the regulations, all temporary workers in all guises are basically vulnerable.
  4. There is definitely not one size fits all solution.
  5. It is an opportunity for recruiters to show added value to end-clients.
  6. Contractors/freelancers are largely unaware of implications.
  7. There are risk management and operational framework techniques available.
  8. It’s not the end of the world.
  9. A properly constituted employment services provider (umbrella as was) is already 8/10ths of the way to AWR compliance now.
  10. Shameless plug – Parasol are experts in the field of temp workforce management.

So what can Agencies expect to need to do and resolve with clients? Well, dialogue is important and bringing people up to speed. This is not on the basis of fear, it’s on the basis of understanding where an end-client sees the temporary workforce going for them. At worse case, the staffing business is going to need to collect some data about rates of pay from that end-client and in turn be prepared to pass that data on to providers that will largely mitigate the risks for the agency and the end-client. In addition, there may need to be conversations around margin, rates and tenure but is that really such a bad thing?

And what about swedish derogation I hear you cry as you unpack your meatballs and sofa. Well, there is certainly the basis of a compliant (I hate the word “outside”) AWR model and again I will make the point that the model is very close to what a professional provider (Parasol) does today. Adding the extra componets is not trivial but equally with a long term view, achievable.

Let’s not forget that the courts will be the judge of this new world and as we have seen in Germany (Union class cases) the need for a staffing business to engage with a professional provider is paramount.

Our AWR site has of course more details and do get in touch via this site or one of the others if you have any specific questions you would like answering. See you at an AWR seminar soon, we will be the ones with solutions, not gloom :)

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by Rob Crossland

Why a recruiter should refuse a provider “incentive”

September 24, 2010 in Contractor News, Freelancing, Industry comment, Recruiter News

The umbrella company market is pretty competitive with a variety of techniques used to attract Contractor business. Some providers use a more direct to Contractor approach featuring fee promotions and big referral fees. Others try to work with Recruitment Agencies to explain how it all works and get the Recruiters to then refer to (usually via a preferred supplier process) the providers that the Agencies work with. Here at Parasol we do a mixture of Contractor word of mouth of referrals (for a decent fee discount) and work closely with Agencies to deliver service efficiency, fast processing and help them mitigate their risks. I will declare that we sometimes send Recruiters a promotional pen, a mouse mat or even the odd donut drop, but that’s the extent really. We draw the line at providing individual recruiters with vouchers, gifts or cash. Surely what provider a recruiter refers to should be based on the principles of service, corporate policy and a trusted relationship that helps the recruiter get the job done.

Now, it is ok to work with an Agency, disclose an incentive program and for the provider to pay the tax on behalf of the recruiter on their own tax settlement. It’s not a great way to do business in my opinion, but it is legal and with transparency, is used (not by us!). However, in 2010 we have the new Bribery Act to consider and what are the implications for these incentive schemes (official and unofficial).

If a person is being paid without the consent of his employer for passing leads to another business then they would fall within the bribery act. The bribery act creates an offence when “an individual gives a financial or other advantage to another person in return for a person improperly performing his function”  The issue arises if the agency are unaware and say a recruiter has a private arrangement with an umbrella company for the passing of leads in return for a payment (a bribe). However, there will be a number of offences apart from the act of bribery. If the recruiter does not declare the payment then he is likely to have defrauded HMRC he is also likely to be found to be stealing from his employer as his employer will most likely want the payment so his employment could be terminated under gross misconduct and the agency could prosecute him for theft. Until recently the practice largely went on unregulated and is difficult to prove but with the new act in force, Agency owners are going to be more keen to ensure that their future business performance is not blighted by messy cases or reputational damage. I would also challenge the owners of these same businesses to consider the impact in a possible sale of the business in relation to due diligence discovering material bottom line contributions, I think that could also negatively impact valuations.

So it must seem a bit obvious to state, but if an Umbrella comes asking for business on the back of cash or other material incentives, then be really very careful. Todays short term gain could be tomorrows serious pain.

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by Rob Crossland

The Mud Slingers are ready…

September 18, 2009 in Contractor News, Industry comment, Recruiter News, Tax

Gordon Brown unsurprisingly appealed to the TUC this week when part of his speech included a loose promise on the Agencies Workers Directive (AWD) coming into power within this government’s tenure. This was then followed by more comment from BIS (used to be BERR and was DTI before that!) that suggested a “2010 or 2011″ implementation – so a perhaps a little bit contradictory to the PM’s position.

Any new contractors/freelancers may be confused by all this as in many ways it is a bit too far off when you are focused on a role and earning some money. For those that are interested (and at a very high level view), it’s EU legislation that grants “temporary workers” the same “rights” as their fully employed counterparts after 12 weeks. I put the terms and values in quotes as the EU seem to think that Contractors need protecting and don’t get any employment rights.  Clearly this is not the case as the Umbrella employee gets FULL employment rights (or should)!

Anyway, like IR35 and MSC before, AWD is starting to create some turmoil and noise. “Umbrellas are dead” and “everyone move to Ltd” is starting to be shouted. In my opinion it does the industry no good to create disquiet in a time when there is equal focus to be placed on helping people get work and start contracting. “Well you would say that Crossland ” I hear you cry – maybe, but don’t forget we also have a true Accountancy Practice (Clearsky) and try to offer the right choice to Contractors based on best advice and not solely on % return (often advertised by the more unscrupulous providers before an individuals position is known!).

Surely if the “industry” (Umbrella Co’s, Specialist Accountants etc) is to have a better image with the authorities then at least some sense of the bigger picture should be thought of? Maybe I am being naive and self interest will always ultimately be the driver for many. The industry needs to wake up and smarten its act up. We and a few others have tried to do it with an emphasis on doing the right thing but that’s not the easy option nor the cheap option.

AWD like its previous legislative policies before it will come in, it is not the end of all current business models, it will simply create new models, some good and some bad. Here at Parasol we are very happy with our plans and confident that a new generation of solid prosperity for Contractors will be created and protected.

So if you read any “the end is nigh” articles that seem to suggest changing how you operate, just take a second to think why that might be.

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