Legal update
WORKING WITH INTERMEDIARIES By Lewina Farrell, solicitor and head of professional services at the REC The REC Legal Helpline continues to receive a high number of queries regarding how to work with intermediaries including umbrella companies, CIS intermediaries and personal service companies. This is for a variety of reasons including the Conduct Regulations opt out, the ITEPA changes in April 2014 and new reporting from April 2015, and the recent consultations on travel and subsistence expenses relief (T&S) and IR35. Members are also concerned about employment status and who should do what checks on the temporary workers. Before an employment business engages with an intermediary it must do the appropriate due diligence. REC has prepared a detailed intermediary checklist for use by its members. In brief employment businesses should check: • The intermediary’s incorporation details including where it has been incorporated, who
the company officers and shareholders are, its VAT registration; • The intermediary’s trading history and credit record – on a daily basis we come across new umbrella companies/CIS intermediaries. When only recently incorporated they have no or a limited trading history – all businesses must start somewhere but you will be paying significant sums to this intermediary on a weekly/monthly basis so you need to know it is financially stable; • That the intermediary will hold monies received from the employment business in a separate trust account and that the account is held in the UK. If the intermediary folds and the funds are not held separately, they may be claimed by the insolvency practitioner and not paid over to the temporary workers/contractors either for some time or at all. The employment business may then face a claim from those individuals to be paid directly
even if it has no liability to do so; • What ID, right to work, DBS, professional qualifications checks does the intermediary carry out on the temporary worker? How does the intermediary manage the Conduct Regulations opt out process? • The terms on which the intermediary will engage any contractors/ temporary workers. If a CIS intermediary, how does it assess that the temporary worker can legitimately work CIS? • How the intermediary pays the temporary worker. If a PSC, does it treat all pay as employment income, or does it pay part salary, part dividend and if so, why? Does the intermediary apply T&S expenses relief and if so, how – this is particularly important given the proposed removal of T&S expenses relief from temporary workers from April 2016. Check that the temporary worker will
receive all of the tax/ NICs relief claimed on their behalf; • Has the intermediary or any individuals running the business ever been investigated by HMRC and if so, why and what was the outcome? We see lots of claims that the intermediary is 100% HMRC compliant or that a QC has confirmed that it applies T&S correctly or a particular supply model is legitimate. Remember that HMRC will never confirm that a business is fully tax compliant (or indeed whether it is investigating a particular company); • Has the intermediary ever received an employment tribunal claim and if so, what was the outcome? For more information REC model contracts have been drafted to protect employment businesses. See the model contracts and the full intermediary checklist at www.rec.uk.com/legalresources/model-documentlibrary
WORKPLACE WELLBEING IS COMING We all know the importance of looking after our physical and mental health, right? We understand there are four key indicators to our prolonged health and wellbeing, which will see us remain fit and active throughout our working lives and into our dotage: • Weight. Excess weight (obesity) is a key cause of diabetes • Exercise • Smoking 6 RECRUITMENT MATTERS NOVEMBER 2015
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• Excessive alcohol consumption This could be wrong! Another approach could be by an extension of the Duty of Care requirements with the onus placed on employers to take further additional responsibility for the wellbeing of their staff by way of additional legislation. The Work Foundation recommended three main ways the government could contribute to building a
healthy, productive UK workforce that is fit for the present, and fit for the future: • Integrating specialist support for older workers into occupational health and back to work services such as Fit for Work • Encouraging individuals and employers to plan early on for the health challenges of working in later life • Changing attitudes and creating an age friendly working environment
including the removal of the 26 week rule and extension of the right to request flexible working. One thing is clear: workplace wellbeing is coming. Stuart Scullion, is commercial director at Punter Southall Health & Protection, an REC Business Partner, and chairman of the Association of Medical Insurers and Intermediaries
www.rec.uk.com
14/10/2015 16:55