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Managing the risks associated with "Direct" contracting staff
by Andy White at 11:52 01/02/01 (News on Agents)
Following on from the story on Agency FUD, Shout99 has received a copy of a presentation sent into a client by Computer People (CP). The presentation attempts to persuade the Client they are at risk of employing contractors direct due to IR 35 and employment law.
Computer People are one of the largest IT agencies and their MD Peter Searle is on the executive board of ATSCo, the agency rep body.

I talked with Ian Jones, the CP consultant named in the presentation, he confirmed that the document had been prepared for CP by a legal and accounting firm called the 360 Group. I asked him, could he tell me how many Ltd Co contractors "employed" by CP had won an employment tribunal against them. In other words how big was the risk of employing IT Contractors direct. He refused to comment and made it clear that any other question would be met with "no comment".

I find it interesting that the 360 Group had drafted this paper. They specialise in providing accountancy services to contractors. From their website on why contractors should choose them 3 sixty have proven that personal service and rapid expansion are not mutually exclusive if controlled and managed correctly. Ethics and Partnership have played a major part in the ability to create long term loyalty among clients and introducers. (items in bold from the web site)

Many will question the conflict between these noble objectives and the same company preparing a paper for an Agent that sets out to persuade a client company to break a contract with possibly a client of the 360 group! Are contractors, who are clients of the 360 group, aware of this work being carried out on their behalf?

Prior to receiving this paper we had sent an email to Ann Swain the CEO of ATSCO

Copy of email sent on 31st Jan.

Attn Ann Swain

We have received a report about Agencies trying to force contractors out of a direct relationship with a client and insert themselves as intermediary.

This may result in a lower fee for the Contractor, a more confused relationship, which could result in the Contractor failing IR 35 and if the client was substantial, the possibility of higher credit risk. In addition you seem to be encouraging clients to consider laying off employees and forcing them to work through an Agent. IOW; The Friday to Monday scenario that the Government was supposed to stop with IR 35



The Agency is using IR 35 as a reason that Clients should be concerned about employing Contractors direct.

This is misleading. As your own information points out, the presence of an Agent is irrelevant in determining whether a contractor is caught. And the Revenue has pointed out that; failing IR 35 does not make you an employee.

What is the view of ATSCo on this "negative" selling tactic?

It hardly seems to meet the promise made on atscojobs
ATSCo's strict Code of Practice, combined with a transparent complaints procedure, means job seekers will be using IT recruitment companies with the highest ethical standards.

Will you be refusing membership to those agencies using such a tactic, or if a member; cancelling their membership?

We will be running more on this and I wanted to give you the chance to comment.

At the time of going to press we have not received a response

We would be interested in receiving any more examples of these marketing tactics.

Andy White

Text of CP presentation:
Managing the risks associated with
“Direct” Contracting Staff


This Proposal is based on concerns Computer People and other recognised experts in the Industry have regarding the practice of employing freelance IT contracting staff directly, rather than via an established Agency.

There have been a number of legislative changes in Employment Law and The Finance Act which have encouraged both contractors and clients to review their current contractual obligations and relationships with agencies.

The Risks of Engaging Contractors Direct

Whether a contractor is employed directly, or, via the contractor’s Service Company, the Inland Revenue and the Courts apply a series of “control tests” to determine whether the true relationship with the individual is, in fact, akin to an employer / employee relationship.

If the individual contractor:

· works under the day to day control of or is supervised by individuals within the hiring Company.
· takes little or no commercial risk in undertaking project work
· does not use his /her own equipment
· is performing the same task for more than one month,

then there is a significant risk that the individual may be considered in law as an employee of the hiring Company.

If the relationship between the contractor and the hiring Company is deemed to be an employee then various legal responsibilities will be imposed on the hiring Company and the contractor will acquire certain legal rights in relation to his employer. These include the following:

1 After 12 months service an employee has the right to claim compensation for unfair dismissal up to an amount of £50,000 compensation for any unfair dismissal claim he may bring if his contract is terminated.

The possibility of making a Contractor redundant can, in practice, be difficult to implement given the legal requirement for fair selection and consultation and, therefore, there is a risk of a claim being made by the contractor for unfair dismissal.

2 The contractor may assert various statutory rights such as disability discrimination, sex discrimination, race discrimination and will be entitled to a minimum period of paid leave. In addition, the contractor will not be obliged to work longer than the maximum working hours (48 hours per week) prescribed by law.

3 The hiring Company may also be responsible for outstanding tax and national insurance in respect of that contractor !

Computer People has already worked with many clients to transfer the management of their contractors from a “direct” relationship to an “agency relationship” as contractors working through an Agency are not deemed to be employees. Both the client and the contractors have benefited from these arrangements.

Background to Computer People

Computer People are the market leading supplier of IT professionals, on a contract and permanent basis, to clients throughout the UK, Ireland and Continental Europe. The client base ranges from small, growing companies to major Blue Chip organisations.

With over 28 years of industry experience, we are the longest established IT staffing agency in the UK. In line with market trends we have developed a portfolio of offerings, which are designed to provide an innovative and responsive approach to our clients’ needs.

Ø Computer People is part of the $16 Billion Adecco organisation with 750,000 employees globally. Computer People can provide an international capability through the Group’s network of offices in the United States and Europe.

Ø Computer People employs in excess of 800 people worldwide and has over 4,000 contractors on billing globally.

Ø Computer People has recently won for the 4th time in its 6 year history the COMPUTING awards for Excellence, as the top IT recruitment company in the UK for quality and service delivered to both contractors and clients alike.

Ø Computer People has recently launched “Carecom”, a contractor care package second to none in the Industry. This free of charge benefit package provides the most cost effective services to the contractor, from mortgages, to car leasing, to hotel accommodation and accountancy services.

Contractor Transition

Should a hiring Company wish to transfer the management of direct contractors to Computer People in order to eliminate the risk of the employer /employee liabilities, Computer people would levy a charge as a percentage of the current charge rate for the contractor.

In addition to relieving the burden of administration from the hiring Company, Computer People would ensure that all Professional Indemnity and Public Liability Insurances are covered.


A number of existing Computer People clients have recognised the impact of these legislative changes and determined that the potential risk of continuing to take freelance contractors directly is unacceptable.

We would recommend that all company’s hiring contractors directly review the associated risks. For further information, your Computer People Account Manager would be pleased to speak to you on this matter.

For further details, please contact: Ian Jones on 0161 491 8802

The original document is available here (pdf 60kb)

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Managing the risks associated ... Andy White - 1/02
    i am not a fecking contractor dis_grunted - 1/02
       YES YOU ARE! Anonymous Coward - 1/02
          why are you here? dis_grunted - 1/02
    to repeat dis_grunted - 1/02
       Dis_Grunted reply Anonymous Coward - 2/02
    Unbelievable! TwinTurbo - 1/02
       ATSCo Standards? Anonymous Coward - 1/02
          Thanks Anonymous Coward - 1/02
    Does this mean..... Bill - 1/02
    They've got their facts wrong Anonymous Coward - 1/02
       Agency working anonymous - 5/02
    Counter strikes are needed. Anonymous Coward - 1/02
       Don't worry - it's in hand! Andrew Banks - 1/02
    Indemnity Insurance? robinson - 1/02
       Insurance is Compulsory Andrew Banks - 1/02
          Ins Anonymous Coward - 1/02
             Not compulsory? dijpa - 2/02
                Number of Employees Andrew Banks - 6/02
             Ins anonymous - 5/02
             Aren't you taking a salary fro... anonymous - 6/02
             Employees Andrew Banks - 6/02
                Insurance anonymous - 12/02
    360 Group Anonymous Coward - 1/02
       360 Group and Mortimer Spinks Anonymous Coward - 2/02
    Straws and Grasping Bed Hopper - 1/02
    One month not IR35?!* Anonymous Coward - 2/02
       Shorter Engagements? Andrew Banks - 6/02
          caught for six days velvetwood - 14/02
    Bad grammar Anonymous Coward - 3/02
    360 have responded to this.... The worm that turned - 4/02
       Nothing recvd from 360 group.. Andy White - 4/02
          The reply... The worm that turned - 5/02
             Publish and be damned The worm that turned - 5/02
                360 group Andy White - 5/02
    ATSCo appoint Director to inve... Andy White - 6/02
       Michael Trenchard anonymous - 13/02
    IR35 - of course agencies are ... chrisphilp - 19/02
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