APPENDIX 1
Memorandum submitted by the Recruitment
and Employment Confederation
1. KEY CONCERNS
OF THE
RECRUITMENT INDUSTRY
Unfilled vacancies in the economy indicate a need
for more open labour markets
1.1 REC has taken the position that the
labour market should be fully open to nationals from Bulgaria
and Romania (hereafter referred to as A2 nationals). Labour market
data indicates that there are over 600,000 vacancies in the UK
economy. Our monthly tracking survey Report on Jobs (produced
in association with KPMG and NTC economics and attached to this
submission for information) reports difficulties in recruiting
in many sectors.
Shortages in social care and hospitality persist
1.2 In addition to this data REC members
have highlighted their concerns about recruitment in the hospitality
and social care sectors after the tightening up of work permit
procedures in these sectors. It has been necessary to recruit
from outside of the EAA for these positions in the past. If the
Government believes that certain positions in these sectors should
not qualify for permits under tier 2 of the points based system
it maybe necessary to consider them under tier 3.
1.3 However no sector based schemes under
tier 3 are expected to be allowed until the labour market has
been opened up to A2 nationals. Therefore restricting labour market
entry to these countries is creating barriers to resolving skills
shortages in certain sectors of the economy. Whilst it could be
argued that raising wages in these sectors would help to resolve
some problems, in the case of social care this would have to be
reflected in the money local authorities have to pay for social
care coverage. It is also the case that this would not immediately
resolve these issues as even basic social care and hospitality
industry jobs require a degree of training.
The current regime for self employed A2 nationals
does not offer enough legal certainty for recruitment agencies
1.4 Whilst candidate shortages are of deep
concern to the recruitment industry, REC's greatest concern is
that the current regime leaves recruitment agencies in a very
uncertain position regarding the self employed. Recruitment agencies
will engage temporary workers as employees for taxation purpose.
When doing this it is their obligation to make the relevant immigration
checks if they wish to use the Section 8 defence. Recruitment
agencies also regularly engage the services of those who are self
employed for taxation purposes (such as limited company contractors
and those working on the Construction Industry Scheme). In these
circumstances the recruitment agency will pay the relevant company
gross and the self employed worker is then responsible for settling
their tax affairs with HMRC.
1.5 It is therefore possible for agencies
to engage self employed A2 nationals, the uncertainty surrounds
how the Home Office would view this. Very little guidance has
been provided to date about who would be deemed as self employed
for immigration purposes.[1]
This leaves recruitment agencies in a catch 22. If they choose
to turn away genuinely self employed A2 nationals they will be
discriminating. If they choose to engage them, but they are later
found by HMRC to be employees of the agency the agency has committed
an immigration offence.
1.6 REC raised this concern with the Immigration
Minister in a letter of 23 January 2007. REC also raised the matter
with the Minister directly when attending the Illegal Working
Stakeholder Group meeting of 2 May 2007. To date no further advice
or guidance from the Home Office has been forthcoming.
1.7 This is of deep concern to the REC as
this theoretical problem is now becoming a reality. REC members
in the childcare division have all been approached directly by
agencies in Romania offering "self employed" nannies.
The service is being aggressively marketed to UK agencies when
it seems unlikely that a nanny, who works for one family, could
be truly self employed. Meanwhile in the construction sector REC
members have reported the creation of agencies in the A2 countries
aimed at facilitating the movement of self employed construction
workers to the UK. In this case the workers could be genuinely
self employed (as many are in the construction industry) however
agencies who take these workers run the risk that HMRC finds them
to be employees at a later date.
1.8 In short if the Home Office chooses
to prevent A2 nationals from being employees then recruitment
agencies should be provided with guidance as to what documentation
the Home Office would deem as "proof" of self employment
for immigration purposes. If HMRC considers them to be employees
at a later date then the agency should, of course, cease to use
their services. The guidance from the Home Office would simply
serve as a defence should the agency be subjected to an immigration
inspection.
2. ABOUT THE
RECRUITMENT AND
EMPLOYMENT CONFEDERATION
2.1 The REC represents over 8,000 recruitment
company branches, estimated to constitute half of all branches
by number but a higher proportion by turnover. Over 85% of the
industry is made up of small businesses. In 2006-07 the recruitment
industry generated a turnover in excess of £26 billion and
placed 1.3 million people into temporary jobs every week. In addition
to this almost 800,000 permanent placements were made by the recruitment
industry.
2.2 REC members sign up to our Code of Professional
Practice, which it polices through a complaints procedure and
an inspection team. REC supports its members through the provision
of a free legal helpline, standard documents, and training and
professional qualifications for the industry.
2.3 These support services are all routes
for informing REC members of their duties when checking candidates'
right to work in the UK.
15 November 2007
1 One paragraph of advice for A2 nationals on registering
as self employed is provided in this BIA document: http://www.bia.homeoffice.gov.uk/6353/21395/livingandworkingromaniabulg2.pdf Back
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