According to a survey of more than 3,500 of its contractors by giant group plc, the contractor specialist, 97% have opted-out of the Employment Agency Regulations.
The Employment Agencies Act sets out agencies‘ responsibilities and obligations to contractors. These include providing details of the work contractors are required to do prior to engagement and ensuring suitable accommodation is available when contractors are required to work away from home.
Matthew Brown, Managing Director, of giant group comments: “”Most of giant‘s contractors seem to think that these regulations are entirely inappropriate to their situation.””
“”They believe that remaining inside the regulations provides contractors with no real benefits, and that not-opting out may actually put them at a competitive disadvantage.””
“”The vast majority of our contractors have made the choice for themselves in the interests of their business.””
From where we stand, it looks as if the main reason that contractors are not opting out is for the following reasons:-
1) Agencies are contacting all of their contractors and asking them to tell them whether they are going to be opting in or out. They tell them that opting in may put them inside IR35. Legal experts have disputed whether it makes much of a difference. It may or may not also be illegal for the agencies to do this, as you are not allowed to refuse to get contractors work if they decide to opt in.
2) Contractors are afraid that agencies won‘t get them any work if they don‘t opt out
3) Some agencies are saying that they will charge contractors more if they opt in because of the extra administrative costs
4) Many contractors don‘t fully understand the legislation
5) The Professional Contractors successfully lobbied, along with agencies‘ representatives, for the opt out clause for limited companies.
Basically agencies don‘t want contractors to opt in because they would get the following benefits:-
1) They could potentially go direct to the client at the end of the contract with the payment of a fee
2) Payment is no longer dependent on production of a timesheet
3) Agencies will have to pay contractors whether they get paid or not
4) Agencies will have to tell contractors when they are sending out their CV
This appears to be an area where contractors are a bit in the dark. It will be interesting to see in the future how this all pans out.