Legislation in the recruitment sector appears to be constantly changing making it hard for recruiters to stay informed. We’ve summarised the top 8 changes happening in the sector over the next 12 months that we think you should be aware of.
1 – Employment Allowance
From 2020 the employment allowance will be removed from companies with an Employers National Insurance bill of over £100,000 in 2018-19. This will cost recruiters £3,000 per annum.
2 – Pension Contributions
Auto-enrolment pension contributions will be increasing to 8% of which at least 3% contributions must come from employers. The additional cost will be adding pressure when renegotiating prices although we may see more temporary workers opting out of the pension scheme as the workers begin to contribute 5%. It may become more common for larger end clients to want to see pension contributions as a separate charge on their invoice rather than built in to a standardised charge rate.
3 – A new ‘New starter checklist’
The New Starter list (which replaced the old P46) has been updated for the 2018-19 tax year. Why? There is now a postgraduate student loan box in addition to the current plan 1 and plan 2 student loans. Make sure your registration packs are updated with the newest new starter checklist to ensure your payroll have all the relevant documentation.
4 – Removal of Swedish Derogation (click here for more information regarding swedish derogation)
Swedish Derogation removes the right to equal pay for agency workers after 12 weeks of assignment. Instead Agency Workers are put onto a permanent contract with the agency and paid for at least 4 weeks between assignments. Repeal of Swedish Derogation will mean all agency workers will be entitled to equal pay after 12 weeks. The changes will be enforced from April 2020.
5 – Off Payroll working extended to private sector
Agencies supplying the private sector with Limited Company Contractors (PSCs) will have to consider the Off-Payroll rules from April 2020. Under these rules’ agencies will need to consider if the Limited Company Contractor falls within IR35 and if so deduct the appropriate tax and national insurance. Further guidance is anticipated from the government soon.
6 – Modern Slavery Act changes for public sector contracts.
There is a bill currently going through parliament to propose changes to the Modern Slavery Act 2015. If the bill does pass through parliament the act will be strengthened to force public authorities to exclude operators from their procurement process who have not complied with the Modern Slavery Act. Although we are not sure when the bill will be enacted, the fact that research shows that less than 20% of Modern Slavery Statements meet the legal requirements we suggest recruiters get their house in order now.
7 – Apprenticeship Levy
April 2019 marks the 2-year anniversary of the apprenticeship levy. Many recruitment businesses have seen this merely as a payroll tax due to the limited number of internal employees eligible for apprenticeship training compared to the vast temporary workforce. However, from April 2019 levy payers will be able to transfer 25% of their levy to other employers.
8 – Payslips
From 6th April 2019 payslips will need to show the total number of hours worked. Consideration needs to be made on how this information is going to be delivered to payroll and you will also need to consider any restrictions on your payroll software.