Compliance and the Contingent Workforce...

Successive Governments have been unable, unwilling or resistant to providing a single definition of a  compliance..‘contingent worker’ for use across all legislation whether that is employment law, taxation, health and safety, and etc. There has been a consistent and growing demand from Recruiters and Contractor Management Companies for a definition allowing appropriate legislation to be passed and avoiding the current sticking plaster approach to legislation when unintended consequences emerge. We believe the approach taken by the Office of Tax Simplification – essentially a blank sheet of paper, looking across all government departments – could be the industry’s best long term hope of clarity.

In the meantime the market will suffer the complexities and vagueness of the complicated labyrinth of rules, regulations and legislation which are manifestly not fit-for-purpose. The contingent workforce will grow and demand for contractor management will continue.

Unfortunately the cost of poorly drafted legislation and lack of resource for enforcement creates an uneven playing field where exploitation and non-compliance thrives.

The current Travel and Subsistence consultation and IR35 discussion paper have caught everybody’s attention perhaps because both indicate a fundamental change to the current enforcement regime. Both proposals transfer responsibility for policing compliance to the supply chain and reinforcing that responsibility and raising the risks with debt transfer provisions. This worked with the MSC legislation in 2007 although the continued lack of HMRC enforcement has seen this form of avoidance making a comeback.

However this change signals the need for more due diligence and compliance activity throughout the supply chain. The use of third party accreditation schemes for contractor management companies is likely to grow making supplier selection easier and potentially providing a statutory defence should things go wrong. Selection of the right accreditation scheme will be important.

What is Accreditation?

Accreditation is a formal, third party recognition of competence to perform specific tasks. It provides aquestion_mark means to identify a proven, competent evaluator so that the selection of a supplier or a certification body is an informed choice.

Usually the reason for getting something independently evaluated is to confirm it meets specific requirements in order to reduce risks. Obvious examples are service failure, company reputation, contingent liabilities, or to meet legal or supply chain requirements.

Selecting an accreditation body to evaluate your suppliers needs to be carefully considered to ensure the standard that is being certified meets your specific requirements. You will also need to ensure that the certification body is credible, able to demonstrate their competence, impartiality and performance capability.

Essential Components of an Accreditation Scheme...

1. Published code of compliance
2. Transparent process for developing and maintaining the code
3. Independent and appropriately qualified evaluator(s)
4. Transparent process for the appointment of evaluators
5. An independent published complaints procedure
6. Transparency in managing the balance between commerciality and impartiality

Choosing the Right Accreditation Body and the Right Suppliers...

There are two well established and reputable accreditation bodies for Contractor Management Companies. Both have a list of ‘compliant providers’ which can be used as the basis of a Preferred Supplier List.

Comparison_table

*Professional Passport do not audit to the standard set out in the handbook. The compliance check is based on observation of day-to-day operations.

**Professional Passport provides a £5m insurance backed guarantee against MSC and potential Offshore Intermediary debt transfer liability to Agencies and End Clients who become full members of PP.                                 

***Compliance with FCSA code disqualifies MSC and Offshore providers from achieving accreditation; therefore debt transfer insurance cover is not required.

Orange Genie Group is accredited by both organisations – Why?

Currently Orange Genie is the only Umbrella and Accountancy provider to be accredited by both FCSA and Professional Passport.

Although compliance is central to our beliefs our recognition by both was more about timing than design. Professional Passport was the only specialist accreditation organisation in 2009 when we applied to join APSCo. The process was thorough and involved observing our day-to-day operations, processes and documentation, and was professionally undertaken giving us an insight into best practice.  

In 2008 some of the larger providers got together and formed FCSA with the sole aim of driving up standards. Their published code of compliance gave us a clear standard to work towards and was more detailed and stringent. The use of regulated independent assessors makes the annual accreditation process extremely rigorous.    

Both organisations have their strengths and weaknesses: FCSA is very transparent, develop their codes of compliance with input from HMRC, and have independent regulated assessors. Professional Passport was first to market is more commercially driven and its strength is the depth of knowledge of the owner.

We dismiss All Umbrella Companies Are Equal as a serious accreditation scheme, as self-assessment is a fundamentally flawed accreditation model.

There is a cost to genuine compliance but we believe it’s important to offer our staff, clients and stakeholders assurance that we are in business for the long term and that we care about their welfare, reputation and well-being.

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