Case study: Aspirare
When you partner with Originem as your employment solution provider, it’s reassuring to know that liability for the 60 or so employment rights that come into force as soon as you employ a person rest solely with us. The risks of not operating compliantly spread far beyond the financial. An HMRC investigation or disgruntled population of workers, possibly backed by their union, can damage your professional reputation threatening your long term commercial objectives.
Here’s how one Originem client mitigated the employment risk they faced.
What was the issue?
In January 2011, the Department for Business, Innovation and Skills (BIS) issued a new policy for naming and prosecuting employers who flouted the National Minimum Wage (NMW). Employees could start legal proceedings to recover any underpayments owed and employers also risked a fine from HMRC.
Recruitment specialists Aspirare suspected their existing payroll company were using tax reliefs on business expenses to supplement temporary workers’ wages and bring them up to NMW. As this loophole was closed in the new policy, they sought a compliant solution that didn’t risk large tax bills for their contractors.
How was the risk mitigated?
Originem created a bespoke migration programme for Aspirare’s 105 temporary workers which saw them move to a legitimate umbrella payroll solution. Only genuine business expenses could be claimed, which did not form part of the NMW calculation. Originem were even able to pass some savings made on Employer’s National Insurance back to Aspirare.
As the contractors’ tax calculation changed, it was important to communicate this appropriately to them. Originem created a migration pack and held seminar days at the client offices to explain the changes to individuals. The focus was on the facts that they were still taking home more pay than if they were being paid on a standard PAYE scheme and that this compliant method of getting paid avoided any nasty tax bill shocks later down the line.
What were the results?
- Aspirare retained 100% of the contractors on site, thus minimising churn and any inconvenience to the client
- They also saved 90% of their Employer’s NI and did not have to uplift any contract pay rates
- Later on in 2011 when AWR came into force, Aspirare avoided a further £200k of costs by using Originem’s AWR compliant contract of employment
We found Originem to be very flexible in developing an employment solution that reduced our risk but also protected our contractors. Their commitment to clear and honest communications was excellent and the fact that we made cost savings too was just the cherry on the cake
Giles Plenderleith, Director at Aspirare
_____________________________________________________________________________________________To discover original employment solutions for your business, get in touch with Originem today.
info@originem.co.uk ¦ Tel: 0161 713 1730 ¦ originem.co.uk/recruitment-agencies
