Umbrella Company workers to be targeted by Agency Workers Directive


Umbrella Companies

Whilst taking Limited Company Contractors out of the Agency Workers Directive legislation the Government has decided that Umbrella Company contractors should be included.

This directive will give certain rights to temporary workers that permies get like holiday pay.

They have however put it back to 2011.


Here is what the Government document states:-

‘The scope of the definition does however include agency workers contracted to an ‘umbrella company’, or who operate a personal service company but who are not genuinely self-employed, or who are supplied through ‘˜intermediaries‘, such as Master/Neutral Vendors and any similar ‘˜chain‘ arrangements.

‘Despite concerns raised by some respondents we are concerned that not to include these structures would provide a relatively straightforward way for the unscrupulous to evade the regulations’.


Of course, that means that there is now uncertainty even as regards the Limited Company contractors as HMRC and the Government will be deciding, as in IR35, those that are genuinely self-employed and those that are not.

Here comes a fresh load of law cases a la IR35.

Umbrella Companies Contractors

Said Donal Carroll of Umbrella Companies for Contractors
‘Increasing amounts of legislation by the government can only be adding and increased amount of confusion for both the contractor and in many cases the accountancy firms trying to do the right thing for their clients.

‘If a contractor rightly or wrongly takes the position of going down the Ltd company route from the outset, then they constantly run the risk of having to re-evaluate their position every time their contract changes and also new legislation is put into the market place.

‘This truly means that the government is giving a clear message to all contractors, that of taking the IR35 risk free route’.


Said Damian Broughton of Danbro
‘The good news is that there is a delay in the implementation of the AWD to 1 October 2011, and that it will not apply to all those who are ‘˜genuinely self employed‘, including Limited company contractors and those who work through managed service contracts.

‘There is also possible good news in the knowledge that if the Conservatives win the next election they will have a ‘˜total review from top to bottom‘ of this and other regulation that affects this industry.

‘However, the changes that may be required around how Umbrella companies, workers and agencies work will need to be carefully considered.

‘We will have to wait for the final detail, agreed after further consultation finishes on 11 December, on how the AWD is to be implemented, to decide on any changes that may be required to minimise any negative impact.’

Looks like we are in for another marathon.