FCSA responds to High Court National Minimum Wage judgment

FCSA responds to High Court National Minimum Wage judgment

The Freelancer and Contractor Services Association (FCSA), the independent industry organisation established to set standards for companies providing services to the UK flexible workforce, has announced its backing to last week’s High Court ruling on travel and subsistence expenses in relation to the National Minimum Wage (NMW).

The judgement, passed on 30th December, paved the way for new legislation preventing the use of expenses to top up the pay of flexible workers to a level in line with the NMW. As of 1st January 2011, umbrella companies and recruitment agencies with business models that utilised this method of payment for temporary workers have had to change the way they conduct their business.

Stuart Davis, Chairman of the FCSA, commented: “The significance of this ruling to the UK flexible workforce is two-fold.

“Firstly, it creates a level playing field for umbrella companies and recruitment agencies that provide workers at a NMW pay level. A large numbers of the umbrella companies and recruiters who took advantage of this ‘salary sacrifice’ business model did so in order to gain a competitive advantage at the cost of the flexible worker as they were able to offer workers cheaper than their competitors. This in turn encourage other companies to follow suit in order to remain competitive.

“Secondly, the new legislation has now added an additional layer of protection for vulnerable workers who were being exploited under the old system. NMW is a legal right to all workers in the UK and expenses are reimbursed as tax relief for temporary workers in order to ensure that they are not left out of pocket when taking on a temporary role, not as a way for umbrella companies and recruiters to maintain their margins.

“The FCSA was involved in the consultation process during the development of the new legislation and has supported this point from the outset.

“Indeed the FCSA was established to improve standards and best practice in this industry so judgements and legislation such as this should be welcomed by anyone who shares these values. The UK temporary workforce is hugely significant to the UK economy, and never more so then as we go into a period of recovery after a long recession.”