Update on current legislation affecting Interims by Charles Fowler - Competex
In 2003 the Government introduced the Conduct of Employment Agencies and Employment Businesses Regulations which, at the very last moment, permitted limited companies to opt out of the regulations. This included those working through their own personal service companies as well as through umbrella companies.
In the intervening period, it would appear that umbrella companies have opted out of the regulations, which has the effect of removing protection for low-paid temporary workers working through the umbrellas. This is precisely the group of people that the Government was seeking to protect.
On 19 March this year, the Department for Business Enterprise & Regulatory Reform (BERR) commenced a consultation on the issue of temporary workers employed via umbrella companies, with the aim of revoking the opt in/out provisions. There is a very real danger that all limited companies will also lose this concession. This would have a most detrimental and costly effect on interim providers and ultimately on interim managers.
For example, an interim provider would be required to:
- Satisfy itself as to the interim's identity
- Check on the interim's background
- Check on the interim's suitability for an assignment
- Check on qualifications
- Check on previous assignments
Furthermore, all of these checks will have to be carried out for each and every assignment.
From the interim manager's point of view, there is an assumption in the existing regulations that, by opting in, the client will retain full control and supervision of the interim manager. Such an interpretation of the rules would also apply if the provisions are revoked, and this would have a detrimental effect on the individual's IR35 status.
In addition, the cost to the provider of the checks outlined above will be great and cannot be overlooked. It will be faced with the option of passing the cost onto the client (not realistic), reducing its margin (possible) or reducing the day rate to the interim (most likely).
Initial discussions with BERR officials lead us to believe that they are indeed looking to remove the opt in/out provisions from all limited companies. It would not be the first time that a Government department has used a sledgehammer to crack a nut e.g. IR35, Money Laundering, Settlement Legislation etc.
The BERR consultation ends on Thursday, 11 June 2009 and there is an opportunity to put your view on the BERR website via a survey monkey (their expression!) and you can find a link at: www.berr.gov.uk/consultations/page50428.html. It is important to get the message across to BERR that personal service companies are quite unlike umbrella companies, and that the removal of the opt in/out provisions would have a severe effect on profitability and IR35 status. Please take a few moments to respond to the survey.
About Competex
Competex has grown to become one of the leading suppliers of accountancy services to the interim industry, recommended and endorsed by the leading interim providers. It takes part at each of the Interim Management Association workshops as well as other workshops and seminars around the country. The Competex website is now the largest single source of information for interim managers on the internet. Competex also owns and operates the Interim Management Dining Club, a highly regarded networking opportunity for interim managers and interim providers and details can be found at www.imdc.info
For further information, please call Competex on 01737 234567 or visit their website at: www.competex.co.uk