Recruiters, umbrellas under fire on Dispatches
20 January 2015
A TV programme highlighting questionable pay practices by recruitment agencies and umbrella companies has highlighted the lack of industry regulations and what one umbrella industry leader characterised as “the proliferation of such poor practice”.
Tue, 20 Jan 2015 | By Sarah MarquetA TV programme highlighting questionable pay practices by recruitment agencies and umbrella companies has highlighted the lack of industry regulations and what one umbrella industry leader characterised as “the proliferation of such poor practice”.
Channel 4’s Dispatches last night [19 January] spotlighted tax-avoiding practices by employment agencies and umbrella companies, as well as pointing out methods used by some to circumvent provisions of the Agency Workers Regulations. Among the provisions is a requirement that temporary workers be paid parity with regularly employed staff doing the same jobs after 12 weeks on the assignment.
Freelancer and Contractor Services Association (FCSA) chief executive Julia Kermode said in a statement the FCSA was “increasingly concerned at the proliferation of such poor practice, in particular because it unfairly tarnishes the many compliant businesses that work hard to ensure that they operate to the highest possible standards”.
She told Recruiter the FCSA would support licensing of umbrella companies, depending on the shape of such licensing, and that it wanted to target the poor practice that was exposed last night as it tarnishes the whole umbrella company industry.
Other umbrella company leaders expressed concern about the impact of poor practice on the industry as a whole. Matthew Brown, managing director of giant group, said in a statement: “The reputation of all umbrella companies should not, in my opinion, be tarnished by those minorities that are willing to use loopholes to their benefit. It’s important to remember that while there are some cases of poor practice in the UK, there are also an extensive number of compliant umbrella businesses as well.”
In the programme, within the recruitment sector the pay practices of recruitment agency Qualitycourse, trading as Transline Group, were questioned.
The Channel 4 investigation alleged that workers supplied to an ASOS distribution centre by Transline were incorrectly paid as apprentices and/or suddenly laid off just before they reached their 12-week assignment anniversary. Transline responded by saying it had “at no point” paid below the National Minimum Wage (NMW).
It also said it had invested in software, which prevents a worker being paid less than the “applicable National Minimum Wage”, and ensures employers aren’t worse off though the salary sacrifice scheme.
Transline told the programme: “Such safeguards and systems are specifically designed to ensure that Transline do not break the law.”
The programme also detailed the company’s loss of its Gangmasters Licensing Authority (GLA) licence, as reported by Recruiter last year.
Since Recruiter.co.uk first reported last June about Transline Group subsidiary Qualitycourse’s loss of its GLA licence, Recruiter staff have had ongoing discussions with the GLA and Transline representatives to explore its potential relevance to the recruitment company’s win last spring of the Best Temporary Recruitment Agency Award at the 2014 Recruiter Awards for Excellence.
Recruiter editor DeeDee Doke said: “We have received conflicting information from the GLA and Transline about the circumstances and timings of the licence’s loss, and have been continuing to look into the situation to ascertain what has actually occurred. At this point, we are reviewing our position.”
The Recruitment & Employment Confederation (REC), of which Transline is a member, this morning [20 January] said they would be investigating the “serious allegations”.
REC chief executive Kevin Green said in a statement: “We will write to the agency today to investigate concerns raised by the programme around the potential misuse of apprenticeships and the accusation made around potential abuse of Agency Workers’ Regulations.”
Transline today said it refuted the allegations made in the programme and had instructed its lawyers to begin legal proceedings against Channel 4 and programme makers Firecrest Films for defamation.
Umbrella company MAC Professional Solutions was also investigated by the programme. One worker spoken to by Dispatches, was meant to be paid £12 an hour but was receiving about £3 to £4 less as he was forced to pay the umbrella company a fee for processing his wages, as well as holiday pay and National Insurance contributions.
The programme estimated there were 200,000 workers like that employed by such firms.
An undercover meeting with MAC Professional Solutions general manager Patrick Shaw, in which the reporter posed as the owner of a recruitment agency wanting to drive down costs, explained how workers can be paid less than the NMW and not be entitled to workers’ rights.
In response, MAC Professional Solutions said it had been investigated by HM Revenue & Customs (HMRC) in December 2014 and was found to be “fully compliant”.
Umbrella company Parasol founder and CEO Rob Crossland said in a statement: “Any umbrella company that flouts minimum wage legislation cannot call itself compliant.
“Failure to pay workers the minimum wage is illegal and unethical. Such behaviour deserves to be exposed and punished.”
Parasol MD Derek Kelly said in the same statement: “The government has sufficient powers to immediately put out of business those umbrella businesses that break the law. What is needed is significant enforcement action to once and for all clean up the industry by eliminating rogue traders.
“This should include going after the personal assets of the owners of these businesses, and those so-called professional advisers who profit by constructing artificial schemes to target the most vulnerable workers in society.”
Kermode said the FCSA was “uniting the compliant umbrella sector to work together with HMRC to develop policy changes that will specifically target these unethical practices, and work to eradicate them”.
“While we welcome Channel 4’s exposure to bad practice, we also wish to redress the balance because umbrella employment is a positive choice for many. It enables workers to undertake a number of temporary assignments whilst having employment rights, all statutory benefits, and continuity of employment.”
Crossland said it was “frustrating” last night’s programme did not make the benefits of umbrellas clear.
“As HMRC itself recognised in its recent discussion paper on travel expenses, employment via an umbrella company is an attractive option for many skilled, professional, high-earning contractors.”
The REC’s Green said: “For a long time we have been calling on HMRC to provide greater clarity of the regulations around umbrella companies and travel & subsistence schemes and for greater enforcement of the laws already in place.
“Our members should be reassured that we will investigate where there are allegations of behaviour that brings our industry into disrepute and tarnishes the reputation of hard working recruiters.”
The GLA and HMRC did not respond before deadline.
Channel 4’s Dispatches last night [19 January] spotlighted tax-avoiding practices by employment agencies and umbrella companies, as well as pointing out methods used by some to circumvent provisions of the Agency Workers Regulations. Among the provisions is a requirement that temporary workers be paid parity with regularly employed staff doing the same jobs after 12 weeks on the assignment.
Freelancer and Contractor Services Association (FCSA) chief executive Julia Kermode said in a statement the FCSA was “increasingly concerned at the proliferation of such poor practice, in particular because it unfairly tarnishes the many compliant businesses that work hard to ensure that they operate to the highest possible standards”.
She told Recruiter the FCSA would support licensing of umbrella companies, depending on the shape of such licensing, and that it wanted to target the poor practice that was exposed last night as it tarnishes the whole umbrella company industry.
Other umbrella company leaders expressed concern about the impact of poor practice on the industry as a whole. Matthew Brown, managing director of giant group, said in a statement: “The reputation of all umbrella companies should not, in my opinion, be tarnished by those minorities that are willing to use loopholes to their benefit. It’s important to remember that while there are some cases of poor practice in the UK, there are also an extensive number of compliant umbrella businesses as well.”
In the programme, within the recruitment sector the pay practices of recruitment agency Qualitycourse, trading as Transline Group, were questioned.
The Channel 4 investigation alleged that workers supplied to an ASOS distribution centre by Transline were incorrectly paid as apprentices and/or suddenly laid off just before they reached their 12-week assignment anniversary. Transline responded by saying it had “at no point” paid below the National Minimum Wage (NMW).
It also said it had invested in software, which prevents a worker being paid less than the “applicable National Minimum Wage”, and ensures employers aren’t worse off though the salary sacrifice scheme.
Transline told the programme: “Such safeguards and systems are specifically designed to ensure that Transline do not break the law.”
The programme also detailed the company’s loss of its Gangmasters Licensing Authority (GLA) licence, as reported by Recruiter last year.
Since Recruiter.co.uk first reported last June about Transline Group subsidiary Qualitycourse’s loss of its GLA licence, Recruiter staff have had ongoing discussions with the GLA and Transline representatives to explore its potential relevance to the recruitment company’s win last spring of the Best Temporary Recruitment Agency Award at the 2014 Recruiter Awards for Excellence.
Recruiter editor DeeDee Doke said: “We have received conflicting information from the GLA and Transline about the circumstances and timings of the licence’s loss, and have been continuing to look into the situation to ascertain what has actually occurred. At this point, we are reviewing our position.”
The Recruitment & Employment Confederation (REC), of which Transline is a member, this morning [20 January] said they would be investigating the “serious allegations”.
REC chief executive Kevin Green said in a statement: “We will write to the agency today to investigate concerns raised by the programme around the potential misuse of apprenticeships and the accusation made around potential abuse of Agency Workers’ Regulations.”
Transline today said it refuted the allegations made in the programme and had instructed its lawyers to begin legal proceedings against Channel 4 and programme makers Firecrest Films for defamation.
Umbrella company MAC Professional Solutions was also investigated by the programme. One worker spoken to by Dispatches, was meant to be paid £12 an hour but was receiving about £3 to £4 less as he was forced to pay the umbrella company a fee for processing his wages, as well as holiday pay and National Insurance contributions.
The programme estimated there were 200,000 workers like that employed by such firms.
An undercover meeting with MAC Professional Solutions general manager Patrick Shaw, in which the reporter posed as the owner of a recruitment agency wanting to drive down costs, explained how workers can be paid less than the NMW and not be entitled to workers’ rights.
In response, MAC Professional Solutions said it had been investigated by HM Revenue & Customs (HMRC) in December 2014 and was found to be “fully compliant”.
Umbrella company Parasol founder and CEO Rob Crossland said in a statement: “Any umbrella company that flouts minimum wage legislation cannot call itself compliant.
“Failure to pay workers the minimum wage is illegal and unethical. Such behaviour deserves to be exposed and punished.”
Parasol MD Derek Kelly said in the same statement: “The government has sufficient powers to immediately put out of business those umbrella businesses that break the law. What is needed is significant enforcement action to once and for all clean up the industry by eliminating rogue traders.
“This should include going after the personal assets of the owners of these businesses, and those so-called professional advisers who profit by constructing artificial schemes to target the most vulnerable workers in society.”
Kermode said the FCSA was “uniting the compliant umbrella sector to work together with HMRC to develop policy changes that will specifically target these unethical practices, and work to eradicate them”.
“While we welcome Channel 4’s exposure to bad practice, we also wish to redress the balance because umbrella employment is a positive choice for many. It enables workers to undertake a number of temporary assignments whilst having employment rights, all statutory benefits, and continuity of employment.”
Crossland said it was “frustrating” last night’s programme did not make the benefits of umbrellas clear.
“As HMRC itself recognised in its recent discussion paper on travel expenses, employment via an umbrella company is an attractive option for many skilled, professional, high-earning contractors.”
The REC’s Green said: “For a long time we have been calling on HMRC to provide greater clarity of the regulations around umbrella companies and travel & subsistence schemes and for greater enforcement of the laws already in place.
“Our members should be reassured that we will investigate where there are allegations of behaviour that brings our industry into disrepute and tarnishes the reputation of hard working recruiters.”
The GLA and HMRC did not respond before deadline.
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