Can a Limited Company Contactor be in scope of the Agency Workers Regulations?

Although many commentators believe that the Agency Workers Regulations (AWR) were not intended to apply to ‘professionals’ with their own limited companies (also called a Limited Company Contractor or Personal Service Company contractors) it is certainly possible, in specific circumstances, that limited company contractors, working through a recruitment agency, may be in scope of the AWR and so have the right to ‘equal’ basic terms and conditions with any ‘comparable’ permanent employees at the end-clients company (where they actually work).

Here we look at a limited company contractor offering their services to an end-client, through a contract with a recruitment agency, in more detail.

The Department for Business, Innovation and Skills guidance gives the example of an IT contractor who supplies his services through a limited company:

“An individual has set up his own limited company through which he provides IT services. He has a contract with a TWA (Temporary Work Agency) and is supplied to work on a specific project with an anticipated duration of 12 months.

“The individual has no fixed working pattern and can determine how and when he performs the services; he can also send a substitute to perform the services at any time, or payment is made on a specific, deliverable date, or on a fixed price and not simply on an hour, daily or weekly rate. However, he is subject to the hirer’s reasonable and lawful instructions.

“Given the absence of personal service and mutuality of obligation, the company is a client or customer of the individual. Therefore, the individual is out of scope. This must be a true reflection of the reality of the relationships between the parties involved and not simply a reflection of the contractual terms.”

 

You can read our Guide to the Agency Workers Regulations here.

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