Contractors, recruiters and umbrella companies across the country would have been pleased by the official growth rate figures, released yesterday.

According to the Office of National Statistics (ONS), the UK Gross Domestic Product (GDP) grew by 0.2% during the first quarter of 2010. This is slightly down on the 0.5% figure predicted by many financial commentators, but still heading in the right direction, particularly since some economists anticipated a double-dip recession.

The ONS revealed that the positive growth rate was largely attributable to the financial sector and business services, although both utilities and the manufacturing also boasted encouraging growth figures despite the bad weather at the beginning of the 2010.

A spokesperson from The British Chambers of Commerce said that although a positive GDP should please the majority of SMEs, the growth rates were still lower than expected and are another sign of the challenges facing the UK economy.

With only 2 weeks to go until the general election, the possibility of a hung parliament is still very much a possibility. Yet regardless of who wins, the next 18 months are expected to be pretty painful for most in the freelance marketplace, with wide scale public cost cutting and the prospect of more legislation in the form of the Agency Workers Directive.

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The REC will continue it’s whistle-stop tour of the UK next week when it visits recruiters and umbrella companies based in the south of England.

The ‘On The Road’ UK tour has been set-up as part of an on-going plan by the REC to better educate it’s members about the issues facing recruitment in this country, and how they can prepare themselves for the challenges that lie ahead.

One of the items that will be discussed next week is forthcoming implementation of the Agency Workers Directive, which seeks to give temporary workers certain employment rights after 12 weeks of work. The workshops will unveil a new range of products and services developed by the REC to assist it’s members with AWD compliance, and in particular how they can streamline administration when dealing with PAYE umbrella companies and paying clients.

Chief executive of the REC, Kevin Green, will host Q&A sessions in both Brighton and Southampton, which will also tackle subjects such as employment law and the wider economy. There are still places available for the Southampton event and bookings can be made via the REC’s website.

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With full implementation of the Agency Workers Directive less than 20 months away, the REC has announced that it will issue new guidance to help recruiters, contractors and umbrella companies ensure their businesses are compliant in time for October 2011.

There has been widespread concern within the industry about the fall out of the new regulations and how they will affect the contractor / recruiter and contractor / client relationship. Many fear that paying clients will insist that contractors work PAYE regardless of their employment status while others think that IR35 will feature prominently when trying to determine whether someone is captured by the AWD or not.

Since the proposed regulations were published, the REC has been working tirelessly with BIS, the government and the recruitment community as a whole to ensure it’s members are ready for ‘A’ day. Over the next 12 months, it will conduct a series of workshops to promote client awareness and produce agency tool kits which will include, amongst other things, example contracts for both inside and outside AWD assignments.

The REC’s telephone service has already seen a recent surge in the number of enquiries from concerned recruiters. The online forums are also providing tangible evidence that both umbrella companies and limited company contractors are feeling equally as nervous about the road ahead.

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More confusion exists over the Agency Workers Directive (AWD), this time for limited company contractors.

Some people believe that the AWD will exclude contractors that are working through their own limited company, while many in the industry now fear that this is not the case.

Adrian Marlowe from the Association of Recruitment Consultancies believes that the real test of whether an individual is captured by the AWD will rest on whether or not they are truly in business in their own account, and hence operating outside of IR35.

He predicts that agencies will need to verify whether a contractor actually has their own business, rather than simply operating through a limited company. This of course is likely to cause further administration for agencies although the Government are expected to provide guidelines to assist them. Umbrella companies, used by thousands of interim recruiters, are almost certainly inside the scope of AWD.

Recruiters are already facing problems with the impending implementation of the AWD and the planned increase in NICs. Steve Huxham, the chairman of the Recruitment Society is calling on the Government to freeze new employment legislation. He believes that the proposed measures are not helping reduce the unemployment rate.

Mr Huxham has suggested that the unemployment problem could be resolved if every small business was able to hire a couple of extra members of staff.

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Since the Agency Workers Directive was published last week, various professional organisations have voiced their concerns.

The SPA, which represents some of the biggest umbrella companies in the UK is spearheading a new campaign to further awareness of the various different types of worker operating within the flexible marketplace.

Stuart Davis, who is Chairman of SPA has claimed that the BIS’ response to the Agency Workers Directive reveals a worrying lack of understanding with regards to the freelancing in the UK.

He is also calling on the government for greater differentiation between self employed individuals, limited company contractors and those that work through umbrella companies.

Davis believes that the new regulations are yet another piece of ill informed legislation that risks damaging the flexible labour market. Of course these new regulations are yet to be fully carved in stone. The AWD are not due to be implemented until after 1 October 2011 and we could have a new government then.

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There appears to be more confusion over the timing of the implementation of the Agency Workers Directive (AWD), which many are concerned could have far reaching implications for umbrella companies and contractors that work through their own limited company.

The government had pledged to refrain from implementing the AWD until October 2011 and yet it now seems they are keen to have it in place before the dissolution of parliament. In parliament recently Chris Mullin, MP for Sunderland South, asked Pat McFadden about his plans for implementation of the AWD.

Mullin pointed out that he felt the matter hadn’t been properly thought out and may well have been rushed through before dissolution.

At this point John Penrose, the Shadow Minister for Business, challenged McFadden saying that the government had previously expressed it’s intention delay full implementation of the AWD until the last possible date under European Law.  He also asked whether the government could reassure interested parties that they do in fact have the best interests of the country in mind.

McFadden replied by saying that, in bringing forward the AWD, the government are simply abiding by TUC-CBI agreement and that voters would have the opportunity to make their feelings know at the forthcoming general election.

In light of this debate, it is now clear is that the government is keen to gets things moving and have a blueprint in place as soon as possible in an attempt to reduce the uncertainty within the UK recruitment market. They will shortly be releasing their response to the recent consultation document and it is believed that this will clear up many of the issues raised by the industry.

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