Umbrella firm FS Commercial (FSC) has it back at a statement by the Gangmasters Licensing Authority (GLS) issued last week over its decision not to proceed with a judicial review of an Employment Tribunal, which agreed with not granting FSC a licence.

As Recruiter reported in November, FSC applied for a GLA licence back in September 2010, with a proposal to operate a ‘pay day by pay day’ tax relief model. However, an Employment Tribunal described the GLA’s decision to refuse FSC a licence as “reasonable and appropriate”.

Under ‘pay day by pay day’ schemes, employers pay workers travel & subsistence (T&S) expenses in place of their salary every pay day. By applying income tax and National Insurance (NI) contributions relief to the amount of expenses that an employee has incurred, the employers save themselves considerable amounts in NI contributions and tax. And in some cases, these schemes take the worker’s pay below the minimum wage.

Last week, as Recruiter reported, the GLA issued a statement in which its chairman Paul Broadbent warned other businesses in the sector who are considering a similar T&S scheme, or perhaps operating one already, “to have a serious and immediate rethink”. It pointed to the FSC case as an “important benchmark for future investigations, licensing decisions and court hearings on similar schemes”. 

In a statement FSC says “it was appropriate that we set the record straight, which we can confirm was not on the grounds that we accept that the decision be correct in law”. 

The company says that it was advised by Queens Counsel that it was likely that it would win an appeal on the grounds that the judge made fundamental errors in law. However, the statement says that given an appeal to the High Court would have meant spending even more money, with no certainty of being awarded costs even it if won, “we took the commercial decision not to incur these costs”.