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Will public sector payroll changes benefit umbrella company contractors?

Will public sector payroll changes benefit umbrella company contractors?

Umbrella company contractors and those working through their own limited companies could be pleased to learn that Francis Maude, the Cabinet Office Minister, has abolished a two-tier arrangement that governed public sector payroll outsourcing.

The Code of Practice on Workforce Matters in Public Sector Contracts is to be scrapped with immediate effect. The coalition believes that these regulations have relegated external public sector service providers to a Cinderella type of status whilst privileging an “in-group” which might not have been either the most skilled or the most cost efficient.

The abolition of these rules will benefit SMEs, charities, social enterprises and cooperatives and leave the way open for them to play a fuller role in the running of public services. This move will encourage greater competition in the provision of payroll services and should provide taxpayers with better value for money.

Maude clarified that the move will have no affect on the provisions of the Employment Act 2008 or the regulations relating to the Protection of Employment legislation. Public sector organisations will still be obligated to promote equal opportunities and stamp out unlawful discrimination.

The CBI has welcomed the move, saying it was good news for British taxpayers. John Cridland, the Confederation’s director-general, said the code had hampered firms that tried to provide public services.

Employers will now have the flexibility to decide the best way to reward employees, he continued. Companies will be able to introduce better performance-related pay schemes, or make pension contributions based on length of service.

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