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FAQs

FAQs

  • What is the Latest Employment Legislation
    • The Conduct of Employment Agencies and Employment Businesses Regulations 2003

      OVERVIEW

      The aim behind the regulations is to improve protection to ‘workers’ by granting additional rights.
      The definition of ‘worker’ includes contractors who work through limited companies, as well as those who are subject to PAYE.

      The regulations apply to all sectors of the temporary market, from cleaners to IT contractors, and are designed to cut off some of the unacceptable practices that have been reported as occurring in certain sectors, such as cleaning, modelling, and the construction industry.

      There is the option to “opt out” of the Regulations, and, although we can not insist that you do so, we suggest that you seriously consider the advantages, some of which are stated below.

      WHY OPT OUT?

      1. The Regulations tackle a number of abuses that are not practised in the IT sector, e.g. being forced to take an assignment. Contractors have always had, and continue to have the right to accept or reject an offer of an assignment.

      2. The Regulations increase significantly the administrative burden on Randstad Technologies, and if you are not opted out these have to be completed before we can submit your details to Clients. This means your application will be delayed whilst we await for information from you, and the additional time this requires may reduce your chance of success for a position.

      3. The Professional Contractors Group (PCG) was very involved in the introduction of the opt out facility, and we understand that their general advice is to “opt out”. For more information please see www.pcg.org.

      4. It is put forward that the regulations are not written for a business to business relationship, but instead are more of a ‘master-servant’ one. IR35 is about the relationship between you, the contractor, and the client. In the right circumstances/situations, by “opting out” it will serve to strengthen the argument that your relationship is a business to business one, and that you are in business for your own account.

      5. It distinguishes contractors from PAYE candidates.

      6. It demonstrates to us, and our clients that the contractor has made a conscious decision to become businesses themselves, and are committed to this style of work.

      If having read this you wish to “opt out”, please complete the opt out form.
  • What is IR35?
    • IR35 a brief overview

      The Intermediaries legislation was introduced on 6th April 2000, and is now commonly referred to as ‘IR35’.

      The aim of the legislation is to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries, such as a personal service company (a one-man limited company) or partnership, in circumstances where an individual worker would otherwise:
         for tax purposes, be regarded as an employee of the client; and 
         for NICs purposes, be regarded as employed in employed earner’s employment by the client.
       
      Prior to the introduction of the legislation, an individual could avoid being taxed as an employee on payments for services, and paying Class 1 NIC by providing those services through a personal service company (PSC).  The consultant could take the money out of the PSC, in the form of dividends instead of salary.  As dividends are not liable to NICs, the use of a dividend remuneration strategy results in the worker paying less in NICs than either a conventional employee or a self-employed person.  Also PAYE tax would not apply to the dividends.
       
      The IR35 legislation ensures that, if the relationship between the consultant and the end-client would have been one of employment had it not been for the PSC, the consultant pays broadly tax and NICs on a basis, which is fair in relation to what an employee of the client would pay.
       

      The Circumstances in which the Legislation Applies

      If you provide your services to an end-client via a PSC, then this legislation may apply to engagements with that client.
       
      Broadly, it applies to those engagements where:
            you personally perform services for another person (the client);
            the services are provided not directly with the client but under arrangements involving an intermediary (agency); and
            the circumstances are such that, if you had provided the services directly to the client under a contract between you and the client, you would have been regarded for income tax purposes as an employee of the client.
       
      To decide whether a PSC falls within the legislation it is necessary to construct a hypothetical contract between the consultant and the client based on all the circumstances, including the terms and conditions of relevant contracts and the actual substance of the arrangements between the parties.  Subject to meeting certain other conditions, if that hypothetical contract would be one of service then the engagement is within the legislation.  Existing employment status tests are used to decide whether the hypothetical contract between the consultant and the client would be a contract of service/employment.  More information on the criteria used can be found at www.hmrc.gov.uk/employment-status/index.htm.
       

      Consequences of Ignoring the Legislation

      The Inland Revenue does monitor compliance.  Where they find that the incorrect classification has been applied in respect of a particular engagement, they will ensure that the situation is corrected for the past and, where appropriate, for the future.  Be aware that interest and penalties may be charged on any additional tax/NICs due as a result of any review or enquiry.

      Does the IR35 Apply to Me?

      The IR35 rules only apply if you would have been an employee of your client, had it not been for the existence of your company or partnership.  If you can answer ‘yes’ to the following questions, you would probably have been an employee of your client for the contract in question.
            Do you work set hours, or a given number of hours a week or a month?
            Do you do the work yourself rather than hire someone else to do it for you?
            Can someone tell you at any time what, when, or how to do the work? 
            Are you paid by the hour, week, or month?
            Are you entitled to overtime pay?
            Do you work at the premises of the client, or at a place or places it designates?
            Do you generally work for one client at a time, rather than having a number of contracts?
       
      If you can answer ‘yes’ to the following questions, you would probably not have been an employee of the client, and therefore outside IR35.
            Do you have the final say in how you do the work for the client?
            Can you make a loss on the contract?
            Do you provide the main items of equipment you need to do the job for the client?
            Are you free to hire other people on your own terms to do the work you have taken on?
            Do you pay them out of your own pocket?
            Do you have to correct unsatisfactory work in your own time and at your own expense?
            Do you have a number of customers at the same time?
       
      You will have to think about each contract individually.  Some people will find that they have some contracts, which would have been employment and so come within the rules, and others which do not. 
       
      This is a brief guide on the legislation, however, we strongly suggest that you get professional advice before making any decisions regarding your IR35 status 
  • How do I 'opt out'?
    • 'To Opt Out please fill out the below form and follow the instructions at the bottom'

      Opt Out Agreement
      Under the Conduct of Employment Agencies and Businesses Regulations 2003 (the Regulations)
       
       
      To:      Randstad Technologies Ltd (Randstad Technologies)
      United Kingdom House
      180 Oxford Street
      London  W1D 1NN
       
       

      [complete registered number here]
      [complete name of your limited company here]
      Issued by:                                                                         Registered Number:

      [complete address of limited company here]
       
       


      Whose registered address is:
       

      [complete your name here]
       


      Regarding the following contractor:
       

      [complete date of birth here]
      Whose date of birth is (for identification purposes only):

       

      [complete your address here]
       
      Whose address is:

       
       
      1.      The Consultancy and contractor, having taken appropriate advice to the extent that they feel necessary, hereby acknowledge that it is their intention that paragraphs (1) to (8) of Regulation 32 of the Regulations shall not apply in respect of any Engagement or Assignment agreed between the Parties, and shall continue to remain in force until such time as it is withdrawn in writing in accordance with paragraph 2 below.
      2.      The contractor acknowledges that he/she has the right to withdraw, by giving not less than one week’s notice, provided that it is served in writing and sent to Randstad Technologies Ltd by Registered post.  Where notice is given during an Assignment it shall not apply until the Assignment has ended.
       
      We, hereby agree that we, the undersigned have read, understood, and agree to be bound by the Terms of this Opt Out Agreement, and that the provisions of the Regulations shall not apply.
       
      This document must be signed twice, by the Contractor and on behalf of the Consultancy.
       
                                                                                                                                                            
      Signed by the Contractor                                          Signed for and on behalf of the Consultancy
       
                                                                                                                                                            
      Print Name                                                              Print Name
       
                                                                                                                                                            
                                                                                      Position
                                                                                                                                                            
      Date                                                                        Date
       
       
      To be returned to Randstad Technologies Ltd preferably by fax on 020 7636 0333, by post to the above address, or by email to optout@randstadtechnologies.com.  Before you return it, have you completed all the boxes?  Has it been signed twice, by both Contractor and Consultancy?
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