Contractor convinces agency to go off-PSL by threatening to quit

A contractor’s petition against Preferred Supplier Lists receiving fewer than 50 signatures doesn’t mean other umbrella company users are just accepting the divisive agreements.

In fact, a contractor who threatened to forfeit her role if she could not use the umbrella she wanted – an umbrella not featured on her agency’s PSL – was last week victorious.

Business development manager Chris Akinbile, who revealed the contractor’s ultimatum online, said the contractor was successful, even though the role was already underway.

'Not all agencies will submit'

“Now, not all agencies will submit to this approach,” cautioned Mr Akinbile of Just Accounts Ltd.

“But it is clear that if an umbrella company is compliant and ticking all the right boxes, some agencies are willing to be as flexible as possible.”

Clearly impressed by the contractor’s gutsy move is independent work champion IWORK.

'Good match'

But founder Julia Kermode expressed caution too.

“This tactic won't be for everyone, and not all agencies will be able to go off-PSL. I know it's not always that simple,” she warned.

“[But] well done to the agency for considering the contractor's view, particularly as it sounds like her chosen umbrella was compliant, and probably a good match for others on their PSL.”

'I can't choose'

Paul Sheraton, who is petitioning to have PSLs banned, has had the opposite, more common experience to the contractor who took a stand.

“I recently was refused [by an agency] to use a well-known umbrella company – one which [co-founded] the Freelancer & Contractor Services Association,” he recalls.

“From a contractor’s prospective, there needs to be some kind of government-approved scheme that umbrellas and agencies can agree to use. At the moment, as a contractor, I can’t choose who I work for. Or at least, it’s limited.”

'Some level of choice'

But maybe it’s getting less limited.

According to IPSE research, only five per cent of workers were not allowed to use an umbrella company of their own choosing.

Even when they did come up against a PSL, almost two-thirds of contractors told the contractor body they had “some level of choice,” albeit just from the brollies listed.

'Not a real choice'

But IWORK’s Ms Kermode is among those who don’t think it’s good enough.

“PSLs are not usually in workers’ best interests and do not offer any real choice to the one person most affected by the decision,” she argues.

“In no other sector, is it acceptable for people to have no option regarding their employer.”

'On the fence'

Faye Welsh, a payroll, accounts and credit control adviser, took to LinkedIn to say she was “on the fence” about PSLs.

Yet ultimately, the adviser sounds in favour. “Agencies are responsible for ‘due diligence,’ which would be huge if a contractor could choose any umbrella,” she wrote.

“If a contractor has the choice, would they fall for the inflated take-home pay, dodgy umbrella? I think so. It’s a minefield, [yet] I think there should be a choice but a limited one.”

'Irresponsible'

A former contract recruitment manager David Powers agrees. “I’m still for umbrella PSLs.

“Performing due diligence on any supplier to your business is reasonable and sensible.

“Paying substantial amounts of money to a business that you know nothing about, on someone else's say-so, is irresponsible,” Mr Powers posted. “[And] good ‘due diligence’ will protect both contractor and agency.”

'Risky for all'

Chris Bryce, CEO of the FCSA agrees -- insofar as that where they are “properly arranged and managed,” PSLs can benefit the supply chain.

“But badly managed lists are ineffective and risky for all,” Mr Bryce told ContractorUK.

“FCSA believes that a PSL should always offer the worker a choice, and a single provider list is uncompetitive, unfair, and unnecessary.”

'Contractor heads turn at high take-home'

As to ASLs, the former contractor-turned-CEO said they too can work well, but “only if the umbrellas [featured] are fully accredited and assessed to the highest [compliance] standards.”

Such Approved Supplier Lists are therefore “more difficult, and more risky” for contractor recruitment agencies, he pointed out.

Meanwhile, reacting to Mr Sheraton’s petition, one social media user claimed contractors “do, and always will, have their heads turned” by the umbrella touting the top take-home pay.

On the same thread, the suggestion was that banning PSLs could be, “just the opportunity that the purveyors of avoidance schemes are hoping for.”

'Industry must do a complete 180'

A former tax inspector, Tom Wallace reflected: “Unfortunately, many of those caught up in such schemes are only [caught] because they featured on a PSL.”

Now head of tax investigations at WTT Consulting, Mr Wallace recommended: “For PSLs to add value…the industry must do a complete 180 on the purpose of their existence and the financial dynamics of them.

“Isn't it time that the recruitment industry started focusing on their lifeblood again; the contractor?”

'Computer says no'

“The contractor has been forgotten in all of this,” confirms IWORK’s Ms Kermode. “I'm really annoyed that many PSL arrangements are not in their best interests.

“I totally get the ‘pro’ arguments [for PSLs], and am putting a voice out there to consider an alternative that puts the contractor at the heart of the decision. Too often legitimate non-PSL umbrellas are not allowed because the ‘computer says no’ and the contractor has no say, despite being the party with the most to lose through a poor decision.”

Undeterred at his petition not catching fire, Mr Sheraton says he believes PSLs ‘clearly need some kind of regulation,’ or rules that give the contractor “freedom of choice.”

'Long-standing agreements'

But the agreements are embedded into the contractor industry, as the FCSA outlines.

The association’s Mr Bryce said last night: “Preferred Supplier Lists are long-standing arrangements.

“Many employment businesses use them to de-risk their businesses. Having a PSL of pre-approved umbrella service suppliers means [such businesses] can be comfortable that the choice they offer to their recruits are fully-compliant and so both they, and their workers, can be reassured that tax and employment laws are fully complied with.”

'Either let me use my own umbrella or forget it'

However there can exceptions to and in agreements, as Mr Akinbile of Just Accounts implies the contractor found out to her delight.

“She told me that she had started a new role and was told that she couldn’t use her umbrella company of choice. She was given a list of pre-approved companies which she didn't like or want to work with.

“She then went on to say that she told the agency, ‘either let me use the umbrella company I choose or you can forget about me taking the role.’ She got her way.”

Making clear what he makes of the contractor’s defiance, a philosophical Mr Akinbile offered: “It’s your life, and your time. Do everything you can to protect what is right for you.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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