The recruitment agency cannot force any contractor to work through its affiliated Contractor Umbrella Company under the prevailing law. The agency normally makes lame excuses about the Government’s regulations related to tax evasion or says that client would not allow to change the company. If such a situation arises, contractor should lodge a complaint with the Recruitment and Employment Confederation (REC). Conduct of these agencies is watched through this proper channel and contractors can get their grievances redressed.
Commercial and ethical aspects
Agencies recommend Umbrella Companies due to various reasons. Some of these are actually beneficial for contractors but there are few, which are against their basic rights. There are two possible reasons we would discuss here regarding the recommendation of Umbrella Providers by the recruitment agencies.
The first one relates to the ethical aspects, as the agency would prefer those companies, which are beneficial for both themselves and the contractors. Therefore, they stress on the professional level and competency of an Umbrella Company. The basic reason for this preference is to ensure that the working relationship between all the concerned parties should go on smoothly. In addition, they look for the companies that are compliant with the rules and regulations set by HMRC.
“Contractors can set their own merits for selecting an Umbrella Company but agency’s recommendations may also turn into their favor.” Greg Dickson of Hamilton Bradbury
The second reason is the element of commercial benefits, as the agency would get financial incentives if the contractor works through a company recommended by it. Hence, there is a close interaction between the agency and umbrella Company.
Element of pressure
The agencies can pressurize contractors to use their affiliate Umbrella Companies if there is a clear agenda on the table. It is most likely to affect new contractors or first timers, who don’t have sufficient knowledge to deal with this situation.
It is explained to the contractors by agencies that why they are recommending a particular Umbrella Company. However, the main reason behind all this referral schemes is the commercial benefits of such agencies. It is also not appropriate for an agency as there is an involvement of high risks.
Contractors can use their option of complaining to REC regarding this behavior of agency however, by doing so they may lose the contract.
Market Conditions
The market conditions play a pivotal role while deciding the fate of contractors in this scenario. Contractors can always condemn the misconduct of agencies who force them to join a particular Umbrella provider. However, there are some situations when the contractor is not in a position to step forward against the consent of an agency. The IT sector has incorporated a large number of skilled workers and there are plenty of choices available for the agency. Hence, contractors are sometimes reluctant to follow their own rules. This whole scenario makes things tougher for contractors and provides a chance for agencies to manipulate it for their own benefits.
Contractors can go with their own choice regarding selection of Umbrella Companies but there is a chance that companies referred by agencies are also beneficial for them. Moreover, if contractors think that it would be a wrong deal to work with agency-affiliated company, the power to decide rest with them.
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