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Recruitment agencies are growing increasingly concerned about the implications of non-compliance with HMRC guidelines

Over 5000 new recruitment agencies launched in 2015

But at the same time… Directors of recruitment agencies are growing increasingly concerned about the implications of non-compliance with HMRC guidelines

With the tightening of tax, social security and employment issues, staffing agencies are under increased pressure to ensure that the contractors they supply are fully compliant with regulations and as a consequence will not create liability for their clients or indeed for themselves.

Today’s contingent workforce, which is comprised of temporary staff, freelancers, independent talent, and SOW-based labor, is rapidly growing and evolving. With the contingent workforce moving to an “on-demand” format, where executives and professionals can engage independent talent via a variety of means (including social media, business networks, and private talent pools), many of today’s contingent workers are sourced outside of standardized contingent workforce management (CWM) programs…leaving the enterprise exposed to a variety of compliance risks.

The many intricacies of today’s contingent workforce have forced businesses to balance a series of priorities, including quality, costs, budget, and, of course, compliance, if their contingent workers are mismanaged or not tracked properly.

The tribunal decision not to allow Reed’s appeal against a 158 million tax assessment has led to much press coverage and debate regarding the use of umbrella companies highlighting the need for staffing companies, umbrella companies and hirers who use umbrella arrangements, to review the terms of their contracts with umbrella companies and/or umbrella workers.

Recruitment agencies under threat as employers tighten up on compliance

This is because the standards required for compliance in onboarding increasingly go beyond the regulatory minimum and are subject to constant change – APSCO’s new Compliance standard in Education recruitment and new Rail industry standards as well as waves of regulation in areas as diverse as Right to Work, Data Protection and Health & Safety.

The flexibility to deal with change rapidly is a key capability that agencies need to survive and grow.

Employers need proof that their staffing suppliers are agile enough to guarantee that standards of candidate vetting and verification won’t drop.

This means recruiters now also bear a higher level of business risk. The prospect of losing clients by failing to meet an industry-given standard such as the GPS framework or new Sentinel rules in the rail industry has become a very real threat.

Agencies must capture and retain any form of evidence needed, and be able to produce simple, quality reporting transparently when required.

All of this imposes a demand for resources, expertise and manpower that most agencies are not geared up for.

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