When AWR first came onto the scene there were major concerns that the legislation would have an adverse affect on umbrella company contractors and other temporary workers. It now appears that those fears were largely unwarranted.

The REC recently released results of a research survey of recruiters that showed that agencies were still seeing high demand for temps and contractors. In fact only around 15% of those surveyed said they had noticed a change in demand since the introduction of AWR at the beginning of October last year.

However, a worrying fact did emerge from the survey and that was that 40% of REC members were seemingly oblivious to AWR. Considering the amount of publicity about the regulations prior to their introduction, such a high percentage defies belief. Furthermore, 51% of recruitment agencies acknowledged its existence, but said it had not impacted the way its workers view temporary positions in any way at all.

The REC has been monitoring the effects of AWR on a monthly basis and last month it discovered that the Regulations are causing agencies to incur more costs and complete additional paperwork. Despite this, most recruiters say the temporary marketplace in the UK remains very much open for business and the predicted fall in demand has yet to materialise.

It will be interesting to see whether HMRC’s much heralded IR35 business test has any affect on the way contractors view their work status. AWR doesn’t appear to have had a startling impact; maybe the IR35 test will be nothing more than a storm in a teacup as well.

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Billings for IT freelancers reached their second highest level of the year in April, according to the latest Report on Jobs from the REC.

The latest monthly report showed that demand for IT contractors registered 53.5 on the REC’s index; up from 52.5 in March, but still well down on the 61.6 seen this time last year.

The computing and IT sector also was the healthiest market for job hunters looking for permanent placements. Engineering came in second place for both temporary and permanent opportunities.

The REC’s report also showed that temporary workers across all key sectors should be receiving higher rates. Pay rates for contractor did rise marginally last month but clients can afford to avoid awarding large rate increases because there is an increasing supply of suitably qualified temporary workers in most disciplines.

Despite this, there is still a shortage of candidates for some IT roles. Recruiters have reported that CRM contractors, freelance CAD designers and full-time SAP candidates are among those in short supply.

It’s good news that contractor billings are picking up, but what do the next few months have in store? The economic turmoil in the Eurozone is headline news again. Greece looks set to quit the European Union and the new president of France wants to see an end to austerity measures. And is if that wasn’t bad enough, the UK has fallen back into recession.

David Cameron is determined that his austerity measures will run their course, but will that have an adverse effect on future employment? Or will employers delay hiring permanent staff and turn to contractors instead?

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Within hours on HMRC publishing its IR35 guidance, members of the IR35 Forum issued a statement saying the document did not take key elements of their advice into consideration.

The IR35 Forum was set up specifically to advise the Revenue and the Treasury on the best way to administer IR35. Members of the panels included APSCo, the FSB, FCSA, PCG and the REC.

The joint statement said the Forum members were concerned that the measures HMRC has suggested do not go far enough to satisfy the new approach promised by the Chancellor in the 2011 Budget.

The Government promised to simplify IR35 and yet the business entity tests represent greater complexity, according to the members.

Chris Bryce, the chairman of the PCG, was also a member of the Forum. He said HMRC’s guidance notes show that it is not committed to improving the administration of IR35. External members of the Forum worked relentlessly to come up with innovative solutions, but the Revenue has gone for a risk averse approach that is unlikely to bring about improvements.

The Forum’s main gripe surrounds the scoring system on the business entity tests. External members said the way HMRC has distributed the points is unfair and does not reflect real-life business situations.

Members believe the scoring system will mean a large number of businesses wrongly fall into the high-risk category. This could turn out to be counter-productive because IR35 compliance officers will struggle to identify genuine high-risk case.

We are now entering what the Revenue calls the ‘test and learn phase’. During the next 12 months, the IR35 Forum will monitor the effect of the newly published measures.

The REC’s head of public policy, Gillian Econopouly, said that despite their disappointment, Forum members would continue to fight for a better solution to the IR35 problem.

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Umbrella company contractors might find themselves under more scrutiny after it was revealed that some recruiters have been targeted by conmen.

The scam works like this; the scammer gets in touch with a recruiter saying they require a contractor for a specific assignment. They even say they know exactly who they want to do the work. In the majority of cases, the scammer also contacts the recruiter, this time posing as the preferred candidate.

The recruiter sets up the assignment as usual and starts paying the contractor. Recruitment agencies tend to pay their contractors prior to receiving money from the client, so this is normal practice. But, of course in the case of the scam, the ‘client’ disappears and the recruiter is left out of pocket, having already paid the ‘contractor’.

This scam was recently brought to the attention of the REC when a member company reported they were unable to trace client or contractor.

The REC warned recruiters to check that potential clients were legitimate, preferably by visiting them at their premises. If that is not feasible, they should phone the company and verify that the client does exist.

This is not the first time conmen have attempted to scam recruitment agencies in this way. Recruiters should always be cautious when it comes to assessing new leads and ensure they carry out the appropriate identity and references checks on new candidates.

If you feel you are under undue scrutiny, don’t be alarmed. Recruiters need to protect themselves and professional agencies should carry out strict checks as a matter of course.

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The latest Report on jobs from the REC/KPMG suggests that AWR might after all be having an affect on temporary recruitment. If that were to be true, it could be a matter of concern for umbrella company contractors.

Permanent placements increased for the third consecutive month in March, but temporary billings recorded a decrease. Although the decline was moderate, it was the fastest in more than two-and-a-half years. A lot of panel members reported that employers were converting temps into permanent members of staff because of the effects of AWR.

Demand for IT contractors dropped from 53.9 in February to 52.5 last month, but the report says the IT/Computing sector does continue to perform well.

March saw an increased demand for staff, with strong growth in permanent vacancies offsetting the slower rise in temporary contracts. However, growth in candidate availability did not rise to match the demand, which should spell good news for job seekers.

Tom Hadley from the REC said the latest figures were encouraging, but there is still a need to address the skills gap. Employers continue to struggle to find candidates with the requisite skills in catering, driving, engineering and IT and the Government needs to address this lack of supply.

Commenting on the decline in temporary worker appointments he said this could be due to continued uncertainty over AWR, but it could also be because employers are regaining their business confidence. The advantages of flexible staffing arrangements are well known and the outlook for temporary workers is still largely positive.

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The March edition of the REC’s JobsOutlook report showed that employer confidence in February increased to its highest level in 12 months. It also held good news for both temporary and permanent job candidates.

62% of employers said they intend to hire more permanent staff over the coming three months. Only 6% of respondents said they might reduce their permanent headcount over the period. Looking further ahead, 57% expect to increase the size of their permanent workforce and 42% intend to keep it as is. That suggests that only 1% of employers will be making redundancies.

31% of employers also intend to hire more temporary staff this quarter, whilst 54% say they will maintain their current level of temps. 26% will increase their temporary workforce over the longer term and 63% will maintain their current level.

In the public sector, employers are trying to reduce their workforce costs by cutting hours and pay and making more redundancies. In the private sector, almost 50% of employers see no reason to change their workforce plans.

Employers are still struggling to find suitably qualified staff for permanent roles in the computing, IT and telecoms sectors. Temps with skills in engineering and technical are also in high demand.

Roger Tweedy, the director of research at the REC said the latest figures are positive and although business confidence remains fragile, it is improving. We had a similar scenario this time last year, but employer confidence dropped sharply over the summer months. However, confidence in the jobs market seems to be more durable this year.

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IT contractors may be interested to learn which skills are currently in short supply in the IT sector.

According to the latest Report on Jobs from the REC/KPMG, the shortage of contractors with Citrix, Datastage, Firewall, .Net and Oracle skills that began at the end of last year continued in January. Last month, two new skills were added to the list; Business Analysis and Security.

The REC said that recruiters are now struggling to find candidates with skills in the above-mentioned disciplines.

Demand for IT contractors increased slightly in January according to the REC index. It scored demand at 51.7, compared with 51.4 in December. However, that is still well down on the figure of 61.2 recorded in January 2011.

It has been suggested that the decrease in temporary billings is linked to AWR but as yet there is no conclusive evidence to back up that suggestion. Kevin Green, the chief executive of the REC, acknowledged that there had been a dip in billings for temporary staff, but said employers are still taking advantage of flexible working arrangements.

He went on to point out that employers have also started looking for permanent members of staff even though the economic outlook is uncertain. Demand for full-time IT staff rose in January, although the skills shortage problem once again raises it head.

Agencies recruiting for full-time IT staff have had problems finding developers, database administrators, IT marketers, C#, .Net, SAP and Security candidates. They also report a lack of applicants for DB2 and Datastage positions.

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Umbrella company contractors may not be aware that the UK now has a new employment relations minister. Norman Lamb has taken over from Edward Davey and part of his remit is to look into ways to reduce the amount of red tape facing recruiters.

The REC has now announced that it is to meet with the new minister to ensure he understands the valuable contribution the recruitment sector makes to the UK economy.

Tom Hadley, the director of policy at the REC, explained that the immediate priority was to highlight the positive role of recruiters and to ensure the right regulatory landscape and compliance framework were in place to help the sector prosper.

He went on to say that the Red Tape Challenge provided an excellent opportunity to express the industry’s views. Furthermore, the REC hopes the Department for Business will continue to fight for the sector on overall employment policy and more specific issues such as pensions’ reform and taxation.

Meanwhile, the latest Report on Jobs from the Confederation showed that permanent placements in six out of the eight sectors surveyed increased last month. Amongst the sectors showing positive growth were IT, engineering and office professionals. Demand for hotel and catering staff declined, but that should not come as any great surprise after the festive season.

Kevin Green, the REC’s chief executive, once again pointed out that there was a mismatch between what jobseekers can offer and what employers actually want. Part of the solution would be to provide candidates with better career guidance, he said, as would more apprenticeships that provide young people with vocational skills.

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Four months after the AWR were implemented there is still an area of uncertainty surrounding the position of limited company contractors.

The AWR summit last week discovered that the recruitment sector is divided as to whether or not limited company contractors are inside the scope of the Regulations. About 100 delegates attended the summit and the split was roughly 50:50 when the question arose.

Even members of the panel appeared to have differing views on the subject. Tim Johnson, head of Tim Johnson Law, told attendees that workers need to have an employment contract, or agree to work personally with an agency, before they come under Agency Workers Regulations. However, company contractors do not enter into such a contract, nor do they personally agree to carry out the work, and therefore they are not affected by AWR.

Kevin Green, the REC’s chief executive, on the other hand said that limited company contractors are not automatically outside AWR, although their status was good evidence to suggest that they might be.

Other members of the panel believed that the acid test was whether a worker was outwith IR35. If so, they were likely to also be outside AWR.

Some recruiters have complained that temporary staff are having their contracts terminated before the qualifying twelve week period is up whereas prior to AWR the contract would have continued. One recruiter has suggested that temps either be allowed to opt out of AWR, or the 12 week qualifying period is extended, so that they can remain in employment.

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IT umbrella company contractors were probably a bit disheartened when they read the latest Jobs Outlook from the REC.

In December, companies were reasonably optimistic about their hiring intentions over the next 12 months and the REC index registered +55 for IT temporary roles. However, when the REC asked employers the same question in January, they were more downbeat and the index dropped to just +15. There has also been a drop in hiring intentions over the next three months. In December, the index for short-term hiring stood at +65, but by last month this had fallen to +50.

Commenting on the latest Report, the REC said several sectors have witnessed a change in future demand indicators. A lot of employers seem to have decided to wait out the current economic crisis before making a decision on expanding the size of their temporary workforce.

More than a third of the respondents to the REC’s latest survey made no changes to the size of their workforce in 2011. However, one piece of good news to come out of the Report is that fewer companies made redundancies, cut pay or froze headcounts.

Some people expected companies to reduce their use of agency workers once the Agency Workers Regulations became law on the first of October last year. It would appear that fear was largely unfounded as two-thirds of the REC’s respondents said AWR has had no affect on the size of their temporary workforce.

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There was less demand for umbrella company contractors with IT skills last month than at any other time during 2011, according to the latest Report on Jobs from the REC.

It would seem that the November improvement was nothing more than a blip as demand for temporary IT workers registered a month-on-month decrease from 52.8 to 51.4. In December 2010, demand for IT contractors stood at 57.0.

October had been the previous low point for IT contractors. In the month when AWR came into being, the REC’s index registered 52.1.

The REC Index recorded a decrease in temporary roles in IT, engineering and accounting and financial services and believes this gives a clear indication that companies in the UK are too nervous to commit to even short term hiring.

Bernard Brown, a partner at KPMG, the firm that co-authors the report, said the continuing uncertainty in the Eurozone is to blame for this new lack of business confidence. All we seem to hear is that 2012 will be another tough year.

Despite the decrease in opportunities, REC agents said they struggled to find temporary candidates with skills in Citrix, Datastage, .Net, Oracle and Firewall technologies last month. On the permanent side, recruiters were crying out for people with digital marketing, IT security and web architecture skills, as well as candidates to fill .Net and enterprise software positions.

Recruiters however remain optimistic with many reporting that 2012 has started off on a positive note with clients releasing opportunities after the end of the holiday season.

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The REC is keen to encourage the government to take action to help Britain’s unemployed youngsters, some of whom might become umbrella company employees, obtain meaningful employment.

The Confederation has now sent a letter to the Deputy Prime Minister, Nick Clegg, explaining that recruiters have a vital contribution to make in promoting the recently launched Youth Contract scheme.

Under the scheme, employers will receive up to £2,275 from the government for each person between the age of 18 and 24 they take on from the Work Programme. The CBI first put forward the idea, although the REC did campaign for the government to provide incentives for job creation back in 2010 as part of its Youth Employment Taskforce.

The director of policy and professional services at the REC, Tom Hadley, explained that the Confederation have been pushing for monetary incentives for two years. Whilst it might be limiting to focus incentives just on those who qualify for support from the Work Programme, it is an important step in the right direction. The Government is now prioritising the problem of youth unemployment and concrete measures are being taken to tackle it.

He went on to explain that recruiters are already working with schools and colleges and also promoting the benefits of internships and apprenticeships to their clients. The REC’s Youth Employment Charter aims to highlight this contribution and stimulate more activity.

The government still needs to devise an effective network that will provide careers guidance for the UK’s young people. However, Hadley points out that recruiters can also be relied upon to provide advice to jobseekers and help them decide which career path to follow.

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