Well, the long awaited Agency Workers Directive consultation is here. And of all the possibilities we could have imagined, did anyone predict that ‘Mandy’ would put the brakes on the Prime Minister (who said last month that the AWD would be enacted within months) and the unions (who in their understandable rush to have the AWD come into force were prepared to sacrifice large swathes of the contracting sector). But that’s exactly what Mandy has done, by delaying AWD implementation until October 2011.
But let’s not be blinded by the good news, and in the spirit of the spin we’ve come to expect from our politicians, let’s scratch the surface of the proposed Agency Workers Regulations 2010 (AWR) and see what’s underneath. It’s not quite so pretty.
First, the consultation includes the draft legislation, which is what is proposed to go on the statue book and become law from October 2011. And yet despite Mandy’s two-year delay, we’ve only been given less than eight weeks to comment.
Second, there is the very real threat that, whatever feedback is given by contracting organisations and other interested parties, the legislation could become law by way of a ‘statutory instrument’, without being put under close scrutiny and possibly amended by our elected representatives.
Third, at first reading it looks like those who work through a limited liability company, like so many contractors, will be excluded. Good news, until you read the small print. The AWR consultation says that ‘agency workers contracted to their own personal service company where they are not genuinely self-employed’ will be included.
At this point you may be forgiven for thinking, “Oh no, not again. They totally messed up IR35 and now they are going to do the same with the AWR.” Sadly, there is a very good chance that you are probably right. There’s no way a government department can in a few short weeks create a robust framework for legislation as far-reaching as those proposed. They may claim differently, but forgive us if we point to the lessons of history. Ahem, IR35? And the rest…
But there is a possible silver lining, by way of our old friend, the law of unintended consequences. If the AWR are intended to catch those that are not genuinely employed (and who on earth will be policing this?), they need to use tests of business and employment to determine whether an agency worker, or contractor, is indeed in business in their own right.
And, if the test is positive, and the contractor is in fact determined to be an employee, and deserves the protection of the AWR, then surely employment rights will follow? ‘Cos they have just been proved to be an employee, right?
So, if we continue this train of thought, then end-user clients, and to a lesser extent agencies, which will face the risk and pay the price of employment rights being granted to contractors, are likely to do their uttermost to ensure that none of their contractors have even the sniff of an employee about them.
That means we are left with two options for contractors. Either they are deemed to be employees and therefore qualify for employee rights; or they are not and are in business in their own right. Either way, there is no room for IR35.
The Agency Workers Regulations 2010 may well kick IR35 into touch. Now wouldn’t that be a turn-up for the books!
Dave Chaplin is a former IT contractor in the City of London, and is founder and CEO of ContractorCalculator, and author of the Contractors' Handbook.
Started in 1999, ContractorCalculator (this site) is the leading independent website for the UK contracting industry – most of whom are highly skilled knowledge workers.
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Published: Tuesday, October 20, 2009
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