In a year that will see a General Election dominate much of the political environment, employment law regulations remaining a hot topic. The UK’s legislative landscape is yet to fully adapt to best accommodate and support the flexible, global labour market and while progress is being made, there’s still more that should be done.
So, what consultations do recruiters need to stay up-to-date with, what do they mean for the professional recruitment sector, and what else should staffing leaders be mindful of?
Off Payroll remains topical
Since its introduction, Off Payroll has proven to be a headache for the staffing sector and the UK’s contractor market. Over the last decade we have fought for changes to ensure that fair regulation of the flexible labour market was introduced for the benefit of these workers themselves, the recruiters that place them and the end hirers.
We’ve welcomed progress on this front, the latest of which is the recently opened technical consultation on calculating PAYE liabilities in cases of non-compliance for off-payroll working (IR35). In this call for views (which closes on 22nd February) HM Revenue and Customs will be looking for guidance on the mechanisms to best account for fees already paid when recovering PAYE taxes.
In summary, the consultation aims to ensure that the deemed employer – which can often be the recruiter – isn’t penalised unfairly during HMRC reassessments and doesn’t have to shoulder the financial burden of the full costs incurred when the worker or their intermediary has already made tax payments.
The go live of this charge will be one to keep a watchful eye on in the recruitment sector as HMRC starts auditing the private sector on off payroll placements.
Addressing strike action
Strike action has trickled over from last year and is likely to remain an issue for much of the first half of 2024. With policy makers keen to limit the impact that this will have – particularly on public sector services in healthcare and transportation – the potential to use agency workers to replace those on the picket line has been widely discussed.
The Department for Business and Trade (DBT) has already sought input from the recruitment sector on the feasibility of repealing Regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 to enable hiring agency staff to cover industrial action and is now considering responses.
While we understand the need to maintain critical services, as we highlighted in our response to the DBT, we don’t envisage that this move will result in the desired results. Many of the sectors being impacted are subject to Minimum Service Level regulations, meaning that the repeal of Regulation 7 wouldn’t have a significant impact.
It also can’t be overlooked that in many instances, agency workers are unlikely to want to replace their peers on the picket line, with recruitment firms also understandably reluctant to be seen to be in favour of employers or candidates.
In reality, even if Regulation 7 is repealed we know from its previous repeal in July 2022 to August 2023 that recruitment firms and their candidates will make their decision on whether they are prepared to replace strikers. Repeal of Regulation 7 will not solve the resourcing crisis in the public sector – however that topic is another piece in itself to cover off another time.
Acas
We also saw the beginning of the year kick off with a call for views on the Acas Code of Practice on handling requests for a predictable working pattern. On 19 September 2023, The Workers (Predictable Terms and Conditions) Act received Royal Assent and is expected to come into force around September 2024. It makes sense for the more transactional job roles where workers are with an employer over an extended period. However, it is underpinned by wording and rules from the Employment Rights Act 1996 which simply aren’t suitable for professional contractors.
Agency work, by its nature, is atypical, and may be unpredictable. There are sectors where agency work may be used as a means of outsourcing the legal risks of hiring low-paid workers on unpredictable hours. However, in professional sectors, contracting is highly paid and a conscious choice, and it is normal for assignments to have regular, predictable hours. It makes no sense, then, for a recruiter to be responsible for providing predictable hours for these workers.
In addition, many professional temporary workers are employed by umbrella companies for the purpose of supply, due to an “Inside IR35” tax determination. It is unclear who is the agency for the purpose of the Code. They are generally highly paid, skilled professionals able to make their own decisions about how they work, who are enrolled in employment due to tax law only.
Given that a contract of less than 12 months in duration is considered unpredictable, then most contracting assignments, however senior and highly paid will be in scope of this Act, creating red tape and administrative burden for our members and hirers. We have called for greater clarity on numerous elements of the Code and Act to address these issues, including clearness around the definitions of various worker classifications. Without this, the Act will be tough to apply.
Spring Budget: will the flexible labour market be prioritised?
While a firm General Election date has yet to be announced, there is a fiscal event taking place at the beginning of March which recruiters will likely have their eyes on: the Spring Budget. In what may be the last statement of its kind before the election, the Chancellor will outline the proposals to boost the UK’s economy, and we very much hope that skills growth will underpin these plans.
In fact, in our submission to the Government, we outlined our core recommendations, which include:
- Broadening the scope of the Apprenticeship Levy to align with skills requirements
- Greater government collaboration with business on regional skills hubs and training
- More flexible visas for highly-skilled workers
- Legislation to define self-employment status
- Keeping Off-payroll (IR35) under constant review
- Updated regulation for umbrella companies and greater work to tackle rogue umbrellas
- Action to exclude highly skilled workers from the Agency Workers Regulations
- Supporting reasonable payment terms to protect SMEs within the supply chain
Changes ahead?
It’s going to be an interesting year for the UK staffing sector with other employment law changes as well, such as the introduction of day one flexible working rights. APSCo will continue to ensure that any action is supported by the relevant insight and guidance from recruitment firms and staffing outsourcers.
