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Referring to an article published last week by The Sun newspapers, which accuses recruitment agencies of illegally charging workers and claiming that a loophole is being exploited, the Association of Recruitment Consultancies (ARC) rejects what it views as a slur against the industry.
According to the statement from ARC, the article made a number of sensational claims about the recruitment industry. Firstly, that up to 270,000 workers in low paid jobs were being made to pay employment businesses a weekly fee upon commencing work; and secondly that employment businesses are avoiding paying national insurance by supplying self-employed workers.
The article goes on to state the alleged ‘loophole’ will be closed down in a move due to be announced by the Chancellor of the Exchequer in his Autumn Statement next week.
Adrian Marlowe, Chairman of ARC, said: "This type of allegation is hard to swallow when the industry is highly regulated, both in terms of practice and for payment of tax. It provides excellent services to both candidates and hirers alike. Indeed the industry has worked well for so many years with fewer and fewer complaints that the government has recently scaled back its enforcement section, the Employment Agency Standards Inspectorate.”
“The reality is likely to be not that agencies have behaved illegally, rather that the government has identified an area where individuals claiming to be self-employed have not been paying correct levels of tax. There have been laws in place since 1976 that require agencies to deduct PAYE (Pay-As-You-Earn) and NICs (National Insurance Contributions) from the pay of any individual supplied to a hirer, and which prohibit charging for finding someone work."
“As with any law there are always a few who cross the line, and the government has plenty of existing weapons to address them. The suggestion that illegality is so widespread is wholly rejected. The vast majority of recruiters provide an essential and legitimate service for the United Kingdom," Mr Marlowe concluded.
The Treasury reportedly declined to provide a comment when approached by the ARC.