We are just about to release the stats for the third year and there is one trend that keeps coming up that is just as worrying as it is interesting. It seems that there is a distinct gender gap amongst contractors, temps and freelancers in the UK and, unlike permie employment where the gap is narrowing; this one has nearly doubled since February 2010.

When we first did the research and took the average rates for male and female umbrella workers we found that there was a gap of £2,643 per annum based on an average working week of 37.5 hours and 47 weeks per year. In February 2011 this had risen to £3,225 and now, in February 2012 it’s reached £4,459.

The findings clearly show that a gender gap exists in the contracting market which is a surprise when reports in national press would suggest that the wage gap between men and women is narrowing. In the past year, nearly a third of all board appointees have been women, edging their share of power in FTSE 100 companies up to 13.9%. The reasons that the gap exists are the subject of much debate, with various parties citing aspects such as women taking a break from employment to have a family etc. However I don’t believe this stands up when it comes to contracting. When an end-user employs a contractor, temp or freelancer it is based on them having the required skill set in order to satisfy the end users requirements. Surely it is the skill set and the market for this skill set that should set the rate, and gender should not have any impact at all?

What has been your experience on the ground? Have you been affected by this issue or do you have any thoughts. Leave a comment and let us know.

However, a piece of research we recently completed threw up the fact that one in three (33%) of our own umbrella employees aren’t claiming any expenses whatsoever and they could be seriously missing out by paying too much tax.

One of the main benefits of contracting, temping or freelancing in the UK is the ability to have legitimate business expenses offset against your tax liability. What this means is that, although no one is going to give you the cash back in your hand, the amount of expenses you have incurred will be totted up and deducted from your gross pay before your tax and NI contributions are calculated, therefore reducing your tax liability (as HMRC would say).

This doesn’t mean that you can claim ‘willy-nilly’ but any umbrella company worth its salt will be able to offer robust guidance as to what constitutes a legitimate business expense. At Parasol, we base our expenses policy on the following principles that make sure we can process them quickly and compliantly:

• All claims are for expenses incurred wholly, exclusively and necessarily in performing your business duties.
• You only make one claim per period i.e either one per month or one per week and only include expenses incurred during that period (i.e. June items entered in June claim only). Once approved, further items can’t be added.
• You don’t claim for expenses incurred prior to joining Parasol.
• You don’t submit any travel and subsistence related claims for any one place you have worked, or know you will work, for more than 2 years.
• Always keep copies of your receipts. We have a dispensation with HMRC which means we don’t always need to see them to process your expenses but HMRC can ask to see them at any time and it is your responsibility to have them available.
• You always submit all the necessary documentation associated with any particular claim, such as a signed cover sheet and receipts for items which require them.

We’ve got a comprehensive guide to all things expenses and if you are a Parasol employee and have any expense related queries then our Employee Support Team will be happy to help.

If you aren’t yet a Parasol employee but you have some queries regarding your expenses you can call our Best Advice Team for some, well… er… Best Advice!

The number of self employed people in the UK rose to 4.14 million recently, with 300,000 workers taking the plunge to go it alone since spring 2008. This is the highest number of self employed since records began in 1992 and currently represents 14.2% of the UK working population.

According to the Chartered Institute of Professional Development’s (CIPD) Chief Economic Advisor, John Philpott, this increase in self employment is good news as it is helping to reduce the impact of rising unemployment in the UK.

This could be a double edged sword for seasoned flexible workers, such as professional contractors, temps and freelancers, as it may mean that the competition for assignments is hotting up with more and more people entering the fray. However, with all their experience, established networks of contacts, and undoubted drive and innovation, seasoned contractors and freelancers should retain a competitive edge over the newcomers.

Perhaps the most positive aspect of this story is that with greater numbers comes greater recognition from the powers that be, something we have been calling for since the year dot!

Successive governments have failed to appreciate the valuable contribution flexible workers and the self employed make to the UK economy and they have suffered as a result. Legislation has been regularly brought in to tackle a problem with a ‘one size fits all’ attitude and this has usually led to more challenges for contractors, temps and the professional self employed than it has benefits. The recently introduced Agency Workers Regulations being the latest high profile example. Yes, it is absolutely right to protect vulnerable agency workers but it should not be at a cost to self employed professionals, contractors and freelancers who have made a choice to go it alone.

Hopefully the next time new legislation comes along 4.14 million voices can’t be ignored.

There is no denying it’s tough out there from an economic point of view and you don’t have to look too far into the national media for predictions of doom and gloom. The old adage that ‘no news is good news’ never held sway in the markets of Europe and quiet periods would see financial indices around the world falling. It seems that nowadays the opposite is true and no news means no more bad news so investor confidence spikes a bit.

This has certainly been the case in recent weeks although the International Monetary Fund (IMF) predictions for global economic growth last week will no doubt see stock markets falling back somewhat. According to the IMF, the UK’s economy will grow 0.6% in 2012, a sharp fall from their early estimate of 1.6%. However the news is worse for the Eurozone as the IMF predicts a fall of 0.5% for the same period. There is no doubt that the troubles over on the continent are having a negative impact on the economy.

Incidentally, the prediction for the global economy is growth of 3.3%.

Growing pains
Back to the UK and, however small, growth is growth, so talk of a recession is premature. Short-term stagnation during the 1^st quarter of 2012 will be tough but does not indicate a recession and the numbers are better than those during the last downturn. Confidence is low though as lot of our recovery depends on the Eurozone. The members of the manufacturing organisation EEF are split almost fifty-fifty on how the economy will go in 2012. 51% think things will improve, 49% think things will worsen. However, four fifths expect sales to maintain 2011 levels or go up.

Many, including Centre for Economic & Business Research, predict low interest rates in the UK until 2016. A lot of economists don’t expect rates to go lower though and believe the Bank of England will announce a new round of quantitative easing in February 2012.

Inflation fell recently from 4.8% to 4.2% which is good news, but pay freezes and wage stagnation mean real household income is falling. The Government inflation target is 2% and we are a long way off achieving that yet.

Looking on the bright side
Right, that’s all the negative stuff out of the way. Let’s focus on the positive, and believe it or not, there is a lot to be positive about for the UK contractor and freelancer community.

Self-employment is on the up at the moment, by 8.4% in fact, which brings the total of UK self-employed workers to 4.2 million. Many of you are turning the tough economic times into opportunity, and there are opportunities out there for contractors and freelancers.

A Freelancer.com survey recently highlighted that some sectors look extremely bright, one example being IT. In particular, demand for those with skills in mobile technology and digital skills, such as app development are on the rise. Android development roles are up 33% with iPhone and iPad development roles up 18% and 22% accordingly.

Demand for programming skills is also still high and climbing, e.g. Java roles are up 36% and HTML 5 up 46%. Engineering also remains strong, online demand for engineers according to the Monster Employment Index is up 28% year on year with construction and extraction roles up 24%.

Oil and gas sectors, bolstered by the high price of crude, are still seeing lots of investment as well.

The marketing sector is also recovering well. According to an IPA Bellwether Report, marketing budgets were up for second consecutive quarter at the end of 2011. This is always a good sign for the economy as marketing budgets are amongst the first to be cut when times are hard. Increasing marketing spend is a good indicator that confidence is returning to the UK.

Innovation, innovation, innovation
The biggest reason I feel positive about 2012 for contractors, temps and freelancers is that you lot tend to be an innovative bunch by nature, and innovation is key to the economic recovery in 2012.

When in a recession, there are generally three options to take to get out of it. Firstly, a government can borrow its way out and get people spending by creating jobs, but with the enormity of the UK’s structural deficit this is not an option the current UK Government will take. Secondly, governments can build their way out, and George Osborne did announce some significant public infrastructure projects in his autumn statement which should provide opportunities for contractors, freelancers and temps.

However it is the third option that is key here: innovation. At a time when the Government is attempting to manage the UK’s structural deficit and consumer spending is at an extreme low due to families tightening the purse strings, innovation could be our best tool for creating growth and innovation is something that contractors and freelancers have consistently demonstrated. Hewlett-Packard recognises this and has already pledged to use more SMEs, contractors and freelancers in 2012 on government and private sector projects.

So yes it is tough out there, but stay positive, be innovative and 2012 doesn’t have to be the doom and gloom year a lot of the media will have you believe.

Commenting on recent HMRC tribunal decisions, Crossland said: “There is a very fine line between profitability and business failure in the staffing industry and heavy fines and penalties as a result of a tribunal decision going against you can be catastrophic. This affects not only the individual staffing business and their employees but also their clients, the workers they place, and can create negative publicity for our industry as a whole.

“The first lesson to take from recent tribunals is that recruitment businesses are not always best positioned to manage temporary worker remuneration on their own. Their specialism is recruitment and they have the expertise and experience to do this well. They then have the opportunity to partner with an employment services provider to make sure that the workers are managed and paid correctly and compliantly with no impact on their own profitability. Recent tribunal judgements should be a warning to recruitment businesses looking to manage temporary workers in-house that engaging with a specialist service provider is the least risky road to take.

“Selecting the right service provider is the next challenge. In a lot of the cases I see where an employment solutions business has been engaged, the service providers are noticeable by their absence. Ultimately, a lot of the responsibility should lie with them. What advice were they giving? How were they helping their staffing industry partner to mitigate the risks associated with the placement of temporary labour?

“Correctly structured service providers will have a full contract of employment in place, for all of their temporary workers and contractors, which has been tried and tested at tribunal and stood up to scrutiny. Expense dispensations are simply a way of reducing administrative burden, not a marketing tool and should be applied accordingly and salary sacrifice arrangements should be avoided all together. Correctly structured service providers and employment solutions should always ensure that receipts are retained for worker expenses by the worker in case of HMRC inspection and that claims are only made for legitimate expenses at the precise amount of the expense incurred. There are no work-arounds and no exceptions. It’s just not worth the risk.

“The leading providers have worked very hard in recent years and the services we provide are no longer ‘ad-hoc needs must’ add-ons. We are genuine partners in the supply chain for temporary workers who, when engaged with correctly, take on all the risks and responsibilities associated with placing a temporary worker.”

Lucy Howgego and Nick Broughton have joined the business as Client Relationship Managers with Lucy responsible for Parasol’s London staffing industry partners and Nick covering the rest of the South of England. Both will be based in Parasol’s new London office in Southampton Buildings, Holborn.

Lucy joins Parasol with over eight years staffing industry experience, having worked as a recruiter in IT, telecoms and the medical sector as well as a Business Development Manager prior to joining Parasol. This includes running her own business in the medical recruitment space. Lucy, who enjoys health and fitness, running and tennis in her spare time, has also held sales positions in IT support and the travel industry.

Nick is an experienced staffing industry professional with eight years experience in recruitment and executive search covering temporary and permanent placements in the UK. Nick has been responsible for building consultant teams within recruitment businesses and has spent time running his own niche recruitment business in the finance sector. Nick is a keen golfer and loves to travel, particularly in France and Italy.

Commenting on the new appointments, Derek Kelly, Managing Director of the Parasol Group, said: “We are delighted to have brought on board two experienced professionals in Nick and Lucy who I am sure will make a highly positive contribution to the business. Both have a strong background in the staffing industry and will be able to add value to our relationships with staffing industry partners in London and the South of England.

“These appointments, coinciding with the opening of our new offices, mean that our presence in the Capital has never been bigger and is a sign of the success we have enjoyed over the last 12 months and the confidence we have moving into the 2012.”

We think it all comes down to (in no particular order) who is giving the advice in the first place, their own personal experience, their track record in giving advice and their reputation. There is also an element of trust in there as well.

So if, for example, I wanted some advice on re-plastering my ceiling I’m going to talk to my mate Dyl. He’s been a builder and plasterer for years, he’s done work on his own house (which is very nice!), he’s always got work on so his reputation goes before him and I trust him to give me an honest and impartial opinion.

There aren’t many more pressing issues for a worker in this day and age than pay. Getting paid accurately, compliantly and on time is one of life’s biggest sources of stress for most of us, but when you are a contractor, freelancer or temp, it’s even more important to get it right. The cost of getting it wrong can be devastating to you and your family’s finances.

One of the age old debates for professional contractors is whether or not to set up their own limited company or work through an umbrella company and you’ll find thousands of forum threads, blogs, articles and ‘expert’ views if you spend a minute online looking into it. A lot of these will come from service providers who offer only one or the other option so can be a little less than impartial to say the least. Dodgy promises of inflated take home pay, guarantees from ‘leading QCs’, it all goes on and it’s pretty hard to know who to trust.

So it’s for this reason that we’ve launched our Best Advice campaign this month, offering genuine impartial advice to contractors, temps and freelancers on which business model is best for them. And this is why we know we can offer the best advice available:

We’ve got over a decade of experience in this industry, in fact Rob, our founder and leader, used to be a contractor himself! So that’s the experience box ticked.

As a Group, we currently work with over 10,000 contractors, freelancers and temps at any one time, so our reputation goes before us (tick!).

This also means that a big chunk of the UK’s flexible workforce trust us (tick!).

Within the Group we have both Parasol and ClearSky Accounting so it really makes no difference to us whether or not you decide on umbrella or limited, we can help you either way. This means that we are the only service provider that can give you a full, impartial and transparent opinion on which option is really best for you (massive tick!)

We’ll even give you an illustration of what your take home pay will be either way so you can make a truly informed decision.

So if you are a contractor, freelancer or temp and want some advice on which option to take, give us a call.

And while we are on the subject of advice, what’s the best advice you’ve ever received?

Let us know by leaving a comment below.

Building on the experience it has built up over a decade as market leader, the Parasol Group will now give contractors, temps and freelancers a single point of contact to help them decide on how to best manage their income, finances and tax liabilities.

After answering a few short questions, the Parasol Group Best Advice team will be able to make impartial recommendations to contractors and freelancers as to which option, either working through an umbrella company or setting up their own limited company, best meets their needs. Those for who umbrella working is the best option will be directed to Parasol while those for who limited company contracting is the best option to ClearSky Accounting.

The Parasol Group recommendation will also include an illustration of take home pay to help contractors and freelancers make an informed decision as well as detailed, unbiased guides covering what each option entails. Parasol can then have contractors set up and ready to go within minutes and ClearSky clients incorporated within hours.

Commenting on the campaign, Derek Kelly, Managing Director of Parasol Group, said: “As a group, we have over 10,000 contractors, temps and freelancers currently working within the Parasol Group of companies at any one time. When coupled with over a decade’s experience in the industry, there is no other organisation in the market that has the experience and expertise that we have.

“We wanted to ensure that contractors, temps and freelancers across the UK could benefit from this and our Best Advice team is the result. The team consists of experts in both umbrella and limited company working who will work with contractors on an individual basis to offer impartial advice as to which is the best option for them. We can then direct them towards Parasol or ClearSky accordingly, fully armed with all the relevant knowledge.
“Unbiased information is key, even more so when people are new to contracting or working on a freelance basis, and this service will also help contractors and freelancers to research competitors and verify the information they are being fed from elsewhere.”

Last November the Work and Pensions Secretary, Iain Duncan-Smith, announced plans to bring down the cost of childcare for low earners and in the week that the UK went back to work after the Christmas holidays, the issue is front of mind again. So much so that it was the focus of the 5Life section of Shelagh Fogarty’s show on BBC Radio 5 last week. In the feature, a number of working mums discussed how they managed their childcare issues, including costs, and several of the panel had decided to go freelance or contract as a result.

The flexible nature of contracting and freelancing allowed them to arrange their working hours around their children’s needs whilst maintaining the family income. It also meant taking time off when needed was never a problem.

A report out last week from the Institute of Public Policy Research has found that the universal cost of childcare currently stands at £6.7bn, one of the highest in Europe, and has concluded that helping mothers back to work could save the Government money. It estimates that returning to work on an average wage (the current average family income in the UK is £26K a year) would see mothers contributing £20,050 over four years in income tax.

So are we seeing a new trend? Will more and more working parents look at freelancing and contracting as an option when they are ready to return to work after having a baby? And is this something the Government should be encouraging as the cost of childcare continues to spiral?

Take the quick poll today and tell us what you think! ☛ http://bit.ly/of9onk

We had an interesting discussion pop up on our LinkedIn group recently after one of our colleagues asked the question, “Are you working right through Christmas and New Year (bank holidays excluded), and if you are, is that because of the money or because your client requires you to?”

Parasol contractor, Tristan Buckley, said: “As a contractor I always assume that the client requires you on site at Christmas with the exception of the bank holidays. It can also make Christmas seem a lot more expensive if you take the week off!”

His sentiments were echoed by Ian Brown who said, “My place is open between Xmas and New Year, and I’m seriously considering coming in. I’ve learned before how much you miss not getting paid for a week (or even a day or two), especially when you probably need extra money at this time of year!”

Sharon McDermott made an interesting argument for preparing for Christmas in advance. She said: “Personally, I do try (maybe not always successfully) to make provisions with my finances to keep me going over the break so I can enjoy a well earned rest.”

Andrew Lyndsey agreed. He said: “I’ve decided to take 3 weeks off after having worked 6 months solid with only a few odd days off during this time. My last contract finished yesterday so I’m using this time to charge my batteries ready for the new year. I’m fortunate in that I don’t have to worry about looking for a new contract as I’ve already got the next one sorted with the same company from January. They don’t have a problem with my extended break. I’ll be enjoying my hard earned cash!”

Whatever you are doing over Christmas everyone at Parasol would like to wish you all the best and we hope you have a happy and prosperous New Year.  If you do need us for any reason here are our Christmas opening hours:

Dec 23rd Close for Christmas at 6pm, Dec 24th, 25th, 26th, 27th Closed

Dec 28th, 29th Close at 6pm – last payroll 2.30pm

Dec 30th Close at 4pm – last payroll 2.30pm

Dec 31st, Jan 1st, 2nd- closed

Jan 3rd – Business as usual!