The Compliance Barometer: Recruitment leaders have their say Introduction Steve Wortley, Outsauce Survey results Andrew Webster, Outsauce

Lifting the lid… An anonymous survey to uncover: Attitudes Impact Approach Spoiler: HMRC and unscrupulous recruiters do not get off lightly…

Recruiters - uncertain, but not unwilling Snapshot: Our key discoveries: Agencies are keen to ensure compliance but are unclear of their obligations… …and how to achieve them Doubts too over enforcement

‘Help us to help you HRMC’ Recurrent theme:

Inside The Compliance Barometer

Respondents by number of staff

Respondents by sector

Our survey said…

Supply chain compliance Do you currently take steps to assess and manage compliance risk through the recruitment supply chain?

Supply chain compliance Do you currently take steps to assess and manage compliance risk through the recruitment supply chain?

Varying levels of thoroughness Our contract reviews are checked by our solicitors and advisers We review contractual terms, implement credit checks of relevant entities, carry out full checks of workers (right to work), references, security checks etc. We are contracted to the NHS, therefore our compliance assessments are extremely thorough in every area of our business

Top down pressure Requests for: Candidate information Audits Evidence Indemnities

All part of the service? Should compliance through the supply chain be the agency’s responsibility?

…Or a wish to share the load? (Behind closed doors it’s clear that recruiters want end clients to play their part…)

Due diligence Who should undertake compliance checks of service providers? 2 to 1 say agencies should conduct their own due diligence, not external consultancies Two steps forward… no SLAs?

Contractor compliance

Business Entity Test Is it effective? 20%

What about IR35? A widespread lack of understanding… IR35 is complex, but recruiters are expected to make a decision on it and we are not qualified to do so.

Expenses…

Expenses – a black hole Is non-compliant expense claiming widespread? 2 to 1 say yes

A message for HMRC Only 18% think HMRC is doing enough at present to clamp down on non-compliant claims…

Communication a key issue 2%

So how should non-compliant expense claiming be tackled? Respondents were very forthcoming with their suggestions…

A message for HMRC HMRC should give very clear advice in plain English HMRC puts the burden of interpretation on agencies, but reserves ultimate judgement – and hands out fines if you have interpreted the information incorrectly The only way to tackle the problem is to have more accountant auditors, working on behalf of HMRC reviewing companies’ expenses

A message for HMRC Nobody should be allowed to claim expenses without a receipt (especially umbrella employees). The practice is giving agencies and umbrella companies a bad name and will lead to this method of working being made illegal. Fines. Big ones. Published.

Name and shame…

Pensions auto-enrolment Our survey said… Doubts over clarity A lack of preparation No desire to bear the cost…

‘Opt-out’ of AE? Some short sightedness over the weight of the legislation…

AWR In your opinion, has AWR been an effective piece of legislation or bureaucratic burden?

A conclusive consensus 63% say a bureaucratic burden 4% consider it effective 22% suggest it’s both…

Comparable pay

The end client response

AWR in the test case era Just 8% planning changes…

The bigger picture: Is recruitment industry legislation generally effective in removing unscrupulous practices?

Will HMRC’s renewed powers help? 55% are keeping the faith (but 37% aren’t holding their breath…)

It’s clearly unclear… Are there any areas of legislation from the last government that are clear? No – too much ambiguity. When ministers say we'll let the courts sort it out you can tell they are not interested IR35. We need a simple process for recruiters to identify compliance, yes or no. We are not accountants! EAR2003 is overly complex …it still seems to be written in lawyers’ speak

Legislation: Why bother?

A double whammy? It creates more (of a) burden for reputable compliant agencies while the unscrupulous ones remain Some agencies spend a lot of time, effort and money to make sure they comply whereas others do not comply with everything and get away with it as no specific checks are made Unscrupulous agencies will continue to avoid or play the system – while law abiding agencies will be punished if they are only a fraction non-compliant

…Or a necessary burden? There is a certain ambivalence and arrogance that regards legislation as an irritant rather than a way of improving things for contractors

Government acknowledgement is vital The government should embrace and recognise how recruitment agencies are valuable to the growth of the UK's workforce and stop giving them so much red tape Why isn't the government using the recruitment industry to help people get back into work instead of going at it half-cocked themselves? After all - we're the experts!

Summary