Introduction of employment rights for temp workers finalised

Introduction of employment rights for temp workers finalised

New rules on employment rights for temp workers is good news for Limited company contractors and bad news for umbrella company contractors and agency temp workers

The new rules, called the Agency Workers Directive (AWD), mean that agency temporary workers and umbrella company contractors will basically be given the same employment rights as permanent employees.

The rules come into force in 2011 but this is not necessarily good news for contractors and temp workers who, in reality, often sacrifice employment rights for higher pay rates which are likely to drop if recruitment agencies are forced to pay for employment rights.

Umbrella company workers will also be included in the legislation and the same principal may apply where umbrella company providers may have to raise fees to deal with increased costs of compliance with the AWD. The net result is that the costs of implementing this legislation gets passed on to the contractor.

The great news is that Limited company workers are outside of these laws and can operate as they currently do. In fact recruitment agencies are now more likely to be more co-operative in assisting contractors who want to be self-employed, which will help contractors stay outside IR35.

Contractors should prepare for the introduction of the AWD by contracting through a limited company. Even if you are caught by IR35 you are likely to earn more than using a regular umbrella company or being pay rolled through an agency.