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Below are some of the common misconceptions contractors have whilst using an Umbrella Company and the actual truth behind the myths. If you can not find the answer to your question, please call us on 01206 591 000 or email jaime.thorpe@contractorumbrella.com.

Myth: The AWR does not apply to Limited Company contractors

Fact: Limited Company contractors will only fall outside of the scope of the AWR if they are in business on their own account i.e. outside of IR35.

It is also worth noting that if individuals are found to be inside IR35, any attempt to manipulate a contract to say that contractors are outside IR35 when, they are in-fact inside, will be viewed as avoidance.

Guidance issued in June 2011, states:

“If the arrangements do not reflect the reality of the relationship (e.g. despite the wording of the contract, the actual reality is that the individual is not in business on their own account and they work under the supervision and direction of the hirer) or are an avoidance tactic, then individuals are likely to fall into scope of the Regulations.”

Myth: Day 1 rights are the responsibility of the agency under the AWR

Fact: The day 1 rights are the responsibility of the hirer i.e. the end client.
It is however, the agency’s responsibility to gain confirmation from the client that the day 1 provisions will be met.

Myth: The AWR applies to all Contracts from 01st October 2011

Fact: The AWR is not retrospective so, for contractors already on assignment, the 12 week qualifying period will begin from 01st October 2011.

From 01st October 2001 workers will be entitled to facilities and job information from Day 1 of the assignment.

Myth: Day one rights means that contractors will be entitled to all perks even when they do not apply to all permanent workers

Fact: The regulations are intended to give agency workers equal access to facilities and job vacancies that comparable employees receive. Examples include:

  • Canteen
  • Crèche
  • Transport services
  • Common room
  • Mother and baby room

It does not mean that agency workers are given ‘enhanced’ access rights; so for example, they would be expected to join a waiting list if there was one. Nor does it give them instant access to service or loyalty based benefits such as discounted goods or gym membership. Another example would be if the hirer has 50 employees but only 10 parking spaces available, the agency worker would not be entitled to a space.

Myth: Changing hirer every 3 months means the AWR doesn't apply

Fact: Potentially this is true but in reality just how feasible is it to keep providing different candidates to the hirer every 11-12 weeks for the same assignment. It’s difficult enough finding one suitable candidate, let alone 4 in a year!

It is also worth noting that if a worker is taken on for a third assignment with the same hirer, after two 12 week assignments with 6 week breaks in-between, it could be considered as a deliberate attempt to avoid completion of the qualifying period.

Myth: How can workers be put outside the scope of the AWR?

The simple answer is they can’t. Recruiters should be very cautious of any umbrella company that says all their workers will be outside the scope of the legislation. A worker must be in business on their own account, and this will be determined by their working practises not the contract, in order to fall outside the scope of the contract. If the worker is under the supervision, direction and control of the hirer then they will fall inside the scope and contracts written to suggest otherwise will be seen as avoidance.

Myth: Will the 12 week qualifying period start when the worker signs up with the Recuiter?

Fact: No. The 12 week qualifying period is determined by time spent at the Hirer’s site.

Therefore, if a worker has been in the same position at the site for 10 weeks before they come to your agency then you will need to ensure that the AWR are complied with 2 weeks after they sign up.

Myth: If the worker only works 4 days a week does that mean the qualifying period will be longer than 12 weeks?

Fact: No. The qualifying period applies to calendar weeks, which means that, even if the worker only works one day a week, they will still fall within the legislation after 12 weeks.

Myth: If there is no comparator available does that mean the agency worker will fall outside the scope of the AWR?

Fact: No, in this case basic conditions must be identified without a comparator.

Myth: Is it just basic pay that will need to be taken into account when establishing pay comparators?

Fact: No, you will also need to consider other things such as overtime, shift allowances and performance related bonuses.

Myth: If an umbrella company employs a worker does that mean they are not an Agency Worker?

Fact: No. The individual will still be considered within the scope of the legislation.

Myth: If the worker moves to a sister company of the Hirer will the 12 week 'clock' restart

Fact: If the two companies are part of the same legal entity they will be viewed as being one and the same for the purposes of the legislation.

Myth: If a pregnant worker can't complete their contract can the arrangement just be terminated

Fact: No. If a worker is pregnant and cannot complete their assignment for Health & Safety reasons they must be found alternative work at the same or better rate. If another position cannot be found then they must still be paid the remaining value of the assignment.

Myth: Will the Agency Worker only have rights to statutory entitlements?

Fact: No. If the Hirer has rest breaks or holiday entitlement that exceeds the statutory minimum then the temporary worker must have the same entitlement.

Myth: If a worker moves to a different job at the hirer's site does that mean the 12 week 'clock' re-sets?

Fact: No. In order for the qualifying period to be re-set the new role must be substantively different.

Myth: If an umbrella company operates a Swedish Derogation Model does that mean the Recruiter doesn't have to worry about the AWR?

Fact: No. The Swedish Derogation Model means that the workers are employed by the umbrella company under a full contract of employment. The umbrella company will fulfil requirements for mutuality of obligation by making payment between assignments which means that, providing it is stated in the contract, the section of the legislation that relates to equal pay will not apply. The worker will still be inside the scope of the AWR and will still have the same entitlement to basic terms and conditions of employment as permanent workers at the hirer’s site.

Myth: If the Agency Workers earns more than a permanent worker doing the same job does that mean that the Agency Workers wages will have to be reduced?

Fact: No. The legislation is designed to ensure equality for temporary agency workers; permanent workers are protected by other quality laws.

Myth: Will the 12 weeks qualifying period start again if the worker changes from one umbrella company to another?

Fact: No. The qualifying period applies only to the time spent at the hirer’s site.

Why Choose Contractor Umbrella?

Contractor Umbrella is the hassle-free, straight talking umbrella company that provides umbrella employment for UK based contractors and freelancers. Independently voted as the best umbrella company by the readers of Contractor UK.

As one of the most trusted umbrella companies in the UK, we guarantee our employees peace of mind, absolute compliance and complete security. We are one of the longest standing and most respected umbrella companies in the UK.

If you’d like to find out more, call us on 01206 591 000 or request a call back by completing our online form.

Benefits of working through Contractor Umbrella;

  • Fast and easy registration –  be ready to work in 24 hours, simply register online and we’ll take care of the rest.
  • Calculate your take home pay – use our online calculator to find out how much you could be taking home through Contractor Umbrella.
  • Same day payments – We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.
  • Our Service Guarantee – is our guarantee that you will be looked after at every step of the way.
  • Flexible Limited Company accountancy – when you sign up to our sister company Dolan Accountancy, you can transfer to Contractor Umbrella when umbrella employment better suits or your assignment sits inside IR35.
  • Employee Benefits at Contractor Umbrella there are many benefits available to you as our employee including Childcare Vouchers, our Employee Rewards Scheme, Group Pension Scheme, Foreign Currency Exchange, Contractor Accommodation, Contractor Mortgages and much more.
  • Expert Contractor Support Team – Every employee of Contractor Umbrella has access to our expert Contractor Support Team who are available to deal with any queries that you may have. You can get in touch with the Contractor Support Team, through the online chat, by email or by telephone.
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