Indemnity against AWR, IR35 and Debt Transfer
Agency Worker Regulations (AWR) came into place in October 2011 and impact employers, agencies and workers, including those working under umbrella schemes. HMRC are also cracking down on false self employment in order to recoup lost taxation under IR35 for sole traders or through Debt Transfer under MSC legislation for limited companies.
We believe that any payroll solution must take into account all three issues and Ship Shape provides its clients with complete protection from any charges or liability from Debt Transfer under Managed Service Companies legislation, deemed employment under IR35, or Employment Tribunals brought under Agency Worker Regulations.
Agency Worker Regulations
The regulations are designed to force contractors and agencies to provide agency workers with access to basic employee facilities and work opportunities on day one of their assignments.
After 12 weeks in the same job the agency workers are entitled to the same pay, overtime, annual leave and discretionary leave as comparable direct employees.
Protecting your business
Ship Shape Pay is a payroll company which has a clearly defined service to prevent our clients from suffering heavy financial liabilities under AWR. In summary our approach is as follows:
Self-employed agency workers: Individuals ‘genuinely in business on their own account’ fall outside of the AWR. Ship Shape are specialists in the registration and maintenance of operatives working self-employed, using contracts adapted for AWR and IR35 ‘deemed employment’; documented proof of bona-fide self employment status using questionnaires based on key HMRC criteria; and factual evidence collected throughout the contracts fulfilled by each worker.
PAYE agency workers: If there is a need for clients to take on agency workers on PAYE contracts (which fall under AWR) Ship Shape will ensure the client and their agencies have all the necessary information to ensure AWR rules are met (such as statements of his/her pay rates, employment status, length of employment and time since last employed by the same client) and will identify any workers approaching 12 weeks at risk of being paid less, or working under less favourable conditions than comparable direct employees. Where this is occurring often Ship Shape will propose simple policy adjustments in line with AWR.
However to minimise the need for any such adjustments, Ship Shape Pay provides a unique set of worker benefits including company mobile phones, automatic dispensation of £25 - £50 expenses per week, professional expenses management, tax returns, pensions, cycle to work scheme and child care vouchers. This means the conditions of the agency employee are likely to meet or exceed those of direct employees, avoiding any legitimate claim under AWR.
First line of defence: As the payroll company, Ship Shape is effectively the first “agency” in the employment chain. In the unlikely event that charges are raised with regard to any agency worker paid through us, the tribunal would charge Ship Shape before any approach to end contractors or their search agencies. Ship Shape is a UK based company with UK directors and all assets held in the UK. Ship Shape will defend and defeat the charges, or pay them.
For the avoidance of doubt, Ship Shape will indemnify clients and partner agencies from all AWR charges relating to any self employed worker paid through Ship Shape Pay; and for any PAYE workers paid through Ship Shape Pay, where a simple agreed AWR process is in place.
Debt Transfer under Managed Service Companies legislation
Ship Shape Pay do not promote or facilitate the use of limited companies. Where an operative is subcontracting through a Ltd Company, Ship Shape ensure that the Ltd Co structure is legitimate, eliminating the possibility of any charges or debt transfer: It is established in each case that there is no managed service provider involved, that they themselves are not a MSC provider, that the operative has set up his own ltd co, understands what it is to be a company director, has his own accountant, a company UTR and bank account (and Company CIS registration if required).
In the unlikely event that charges were raised the HMRC will first charge the Ltd Company, then Ship Shape, before they approach the end client. Ship Shape is a UK based company with UK Directors and all assets held in the UK. Ship Shape will either defend and defeat any charges raised, or pay the charges.
For the avoidance of doubt, Ship Shape indemnifies clients and partner agencies against any charges raised under MSC Legislation for any operative paid through Ship Shape.
IR35 Employment Status Liabilities
Ship Shape are specialists at proving the bona-fide self-employed status of the operatives it pays with both contracts and canisters of factual information establishing the actuality of those contracts, facts that establish no mutual obligation, substitution rights, and risk, for example.
Ship Shape had a HMRC review in July 2009, reviewing operatives paid back to 2007 and passed with flying colours.
Again, Ship Shape indemnifies clients and partner agencies against any IR35 charges raised for deemed employment of any operative paid through Ship Shape.