Jobseekers and employers alike must keep an eye on the laws which shape their working lives. The problem is that for most of us, laws tend to be written in a different language! We’ve tried to make sense of these three important changes in Employment Law, so you don’t have to.

The past…Back in April 2014, regulations on the treatment of workers supplied by agencies underwent change.If a worker is supplied to their end user by an agency, then it is up to the agency to account for tax and National Insurance Contributions. They must report to HMRC if the worker is not on the payroll of any other person, and must declare any workers from whom tax has not been deducted and the reason for the non-deduction.

There is an exception; for Personal Service Companies (PSCs), that is, a tiny limited company set up by a single worker who owns most or all of the shares, these rules will only apply if all four of the following conditions are met:

  • The worker personally provides, or is personally involved in the provision of, services to the end user, and receives remuneration for it.
  • That remuneration does not constitute employment income, apart from under the agency legislation.
  • There is a formal contract between the PSC and the end user.
  • The worker is supervised in the provision of their services.

The present…

As of 6th January 2015, ‘overseas only’ recruitment has been banned.

The government has decided to create a level playing field for workers in Great Britain by banning employment agencies from advertising jobs solely in other EEA countries. Employment agencies are now prohibited from advertising a ‘GB vacancy’ in an EEA state other than the United Kingdom, unless certain conditions apply. With the current skills shortage, employers are understandably trying to tap into the international talent pool, but these measures will make sure that there is no discrimination against UK workers by opening job vacancies up to everyone.

And the future…

Travel & Subsistence allowances for temporary workers

HMRC may remove the Travel & Subsistence tax breaks available to temporary workers, as they believe that certain sectors are exploiting the rules.

However, some employment businesses are concerned that if the Travel & Subsistence tax break is simply abolished, this could force a number of umbrella companies out of business. If this happens, more contractors may turn to using PSCs; this means that HMRC will receive less tax. The contractors who can’t use a PSC (generally those who are paid less) may be forced into using PAYE instead, and taking home a smaller wage. We have a nasty feeling that both outcomes would limit the flexibility of the UK labour market.

This is a summary of recent legal changes which may be relevant to UK employers. We are providing this for general information purposes only and specialist advice (such as legal, financial and/or tax advice) should be sought before it is relied on in any way. Neither Resource Solutions Group PLC or its associated group companies accept liability for any inaccuracies in the above information.

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0207 337 9900 or info@resource-management.co.uk

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