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Agency Workers Regulations 2010 do not exclude limited company contractors

Agency Workers Regulations 2010 do not exclude limited company contractors, says the Association of Recruitment Consultancies.

Regulations were laid before Parliament last week to implement the equal treatment requirements for agency workers set out in the Agency Workers Directive.

Responding to reports that the Regulations exclude limited company contractors from scope, Adrian Marlowe, Chairman of the Association of Recruitment Consultancies, said the picture is very different. The Government response document makes it clear that the idea of an exclusion for those operating through limited companies was rejected, and this is reflected in the Regulations. Instead the government provides that an individual is not an agency worker if that individual runs his/her own business and the contract provides that the hirer is a customer of that business.

The test of whether an individual actually has a business, rather than simply operating through a limited company, is designed to winkle out sham arrangements, and government policy is stated to be that this will be a matter for Employment Tribunals to assess. What is very clear is that the use of a limited company as the operational vehicle for an agency worker is not in itself a silver bullet.

Whilst guidance in this area is expected, the fact of the matter is that an agency will have to check whether a contractor operating through a limited company is actually in business. This will add yet another layer of administration to agencies as well as uncertainty, and for the government represents a lost opportunity for clarification.

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