If you are an employment agency, you have probably had one eye on the outcome of the Agency Workers Directive and how the new regulations will affect your business.

One of the main questions that were awaiting response from the government was if limited company contractors are excluded from the new regulations. The response is rather different than first thought, it states that limited company contractors are not exempt from the new regulations unless they can show that they the individual is running a business and that the contract is between the hirer and the business and not the individual.

This makes for messy administration and more work for say construction recruitment agencies that use limited company contractors all the time. The idea is to eliminate a lot of loose arrangements, agency workers have, by operating as a limited company as a means to increase income and could well have an adverse affect on umbrella companies that set up and run these limited companies for contractors.

Umbrella companies are probably still feeling the affects of changes in policies for contractors having to be directors of their own limited companies rather than a small percentage holder. Also with news recently that JSA Services owing £10.6 million pounds to the HMRC after being audited and leaving many contractors unpaid, will question contractors’ belief in these payroll companies.

I can only add that, whilst recruitment agencies and to a certain extent umbrella companies have had an easy ride say 10 years ago, there are now so many regulations and red tape that the amount of work that agencies need to do to understand all the legislation will almost allow no time for recruitment itself….