Public sector malpractice tarnishing image of contractors
The PCG has called for new ‘best practice’ guidance to be provided to public sector organisations, following a series of ‘scandals’ in which a variety of high profile public sector officials has been found to be engaged on an ‘off payroll’ basis.
Chris Bryce, the contractor organisation’s CEO, said that these “examples of malpractice are deeply unhelpful to the thousands of independent professionals out there.”
The main problem would appear to be that, since the start of Danny Alexander’s war against ‘off payroll’ remuneration, there has been no consistency around how contractors are hired by public sector organisations, or how freelancers are expected to prove that they are paying the ‘correct amount of tax’ on their contract earnings.
According to official Treasury data, 94% of contractors are currently able to demonstrate to their respective Government departments that they were paying the right amount of tax.
Pay rises and more contract hires on the cards as economy mends
Continuing the recent trend of upbeat jobs market reports, the latest JobsOutlook survey from the Recruitment and Employment Confederation (REC) shows that organisations are more willing to pay their staff more as confidence returns to the economy.
According to the report, 28% of employers plan to increase their employees’ wages over the coming year, and a further 40% are considering a rise.
Kevin Green, REC’s chief executive, said that the recovery in permanent workers’ salaries was following on from the recovery in the contract market: “We also know starting salaries for new joiners and hourly pay rates for temporary staff have increased sharply at the start of 2014.”
The demand for contract and agency workers continues to grow too – 48% of organisations plan to increase their use of short-terms staff over the next quarter, and 48% over the next 4 to 12 months (a 2% rise compared to last month).
HMRC urged to act over ‘Elective Deduction Models’
Some of the contracting industry’s leading organisations have called on HMRC to take action against a new wave of schemes using the ‘Elective Deduction Model’ (EDM) to circumnavigate a whole range of tax and employment laws.
Under the EDM, short-term workers are classified as ’employed’ for tax purposes, but remain ‘self-employed’ for employment law purposes.
It would appear that the sole purpose of such schemes is to get around the National Minimum Wage, Agency Workers Regulations, Pensions auto-enrolment, and the upcoming onshore intermediaries legislation.
It will therefore come as no surprise that three leading trade associations, FCSA, REC and APSCo, have urged the tax authorities to urgently review the EDM model, as both workers and recruiters / clients face significant risks if they become entangled in such schemes.
New appointments to Freelancer and Contractor Services Association (FCSA)
Last week, Julia Kermode became the FCSA’s full-time Chief Executive.
The trade association represents some of the industry’s leading contractor service providers, including Brookson, Giant, JSA Group, InTouch, ClearSky and Parasol.
Matthew Brown, from Giant Group, was also elected as the Association’s Non-Executive Chairman.
You can find out more about FCSA here