We recently attended a webinar with GLAA, EAS and HMRC a number of government departments, covering the following areas for Employment Businesses;
- Due Diligence
- Mini Umbrella Company Fraud
- Key Information Documents
- National Minimum Wage (NMW) Risks
We’ve summarised our key takeaways, but you can view the entire webinar by clicking the link at the end of this summary.
Who are EAS?
The Employment Agency Standards (EAS) Inspectorate now sits within the Department for Business and Trade, known as DBT (formerly BEIS).
Key Information Documents (KID’s)
Regulation 13A of The Conduct of Employment Agencies and Employment Businesses Regulations 2019 (the Conduct Regulations) took effect from 6th April 2020, and legislated that Employment Businesses must provide a KID to all Agency Workers before terms are agreed.
It was introduced as EAS were receiving a high volume of complaints from Agency Workers including;
- Lack of transparency for Agency Workers – incorrect pay etc…
- Who employs them, and who pays them – Is it the Employment Business, or an Umbrella Company?
- Loss of revenue to the exchequer – due to aggressive tax avoidance / mini-umbrella company fraud etc
All Agency Workers must be given a KID before agreeing terms with an Employment Business. It is always the responsibility of the Employment Business to issue it, and they cannot pass this responsibility on to another party, such as an Umbrella Company. They can however rely on information provided in writing to help them complete the KID (such as deduction calculations etc…)
EAS highlight that the KID should be the first document issued by the Employment Business to the Agency Worker before terms are agreed.
They go on to highlight the key areas of concern regarding Umbrella Companies that they are focussed on;
- Holiday Pay – Umbrella Companies purposely not informing workers of accrued holiday pay balances or withholding claimed amounts. They are aware of instances where Umbrella Company staff are incentivised to not pay this out.
- Pensions – Umbrella Companies opting Agency Workers out of pension schemes, and continuing to take deductions. Also receiving opt-outs from pension providers and not repaying the deductions to the Agency Workers.
- Payroll Skimming – Taking small amounts and then passing this off as an admin error if challenged.
- Disguised Remuneration – Untaxed loans or bonus’ to inflate Agency Worker’s net pay. EAS inspections are uncovering a concerning number of these types of schemes.
EAS Top Tips
For Employment Businesses
- Ensure you have a robust process for issuing KID’s
- Check the payslips of your Agency Workers
- Complete suitable due diligence on your suppliers – If a payroll scheme seems too good to be true, it may well be!
- Ask EAS for advice, or report instances where you feel Agency Workers or the tax system is being exploited.
- Check your payslips for irregularities
- Challenge Employment Businesses if you don’t receive a KID
- The KID can be a useful tool for checking the pay supply chain. Ask the Employment Business to supply a copy of the KID issued to Agency Workers.
- Ask to see a sample of Agency Workers payslips.
If you would like to watch the full webinar recording, you can do so by Clicking Here