Research suggests that more than half of UK recruitment agencies feel impacted by the removal of travel and subsistence schemes for temporary staff, with many more having to undertake minor additional work due to the changes. The change may see agencies pressured to introduce rates that make up for candidates’ reduced take home pay. Agencies could also face increased competition as candidates move agencies to boost pay rates to make up for receiving less pay.
In a survey by Comensura, a managed service provider for temporary labour, over 50% of agencies hiring temporary workers have had to reinvent or change processes due to the removal of tax relief and National Insurance Contributions (NIC) on travel and subsistence for temporary workers. The recent changes restrict temporary workers employed through an employment intermediary, such as recruitment agencies, from claiming travel and subsistence costs free of tax and NIC. As many candidates may feel less inclined to travel long-distance to temporary assignments, agencies are forced to source from a narrower pool of candidates, making it more difficult to find the right worker for each role.
Jon Milton, director at Comensura said:
“The changes in legislation will see a significant reduction in the expenses that temporary workers can claim, meaning that they’ll receive less take home pay. As a result, recruitment agencies have a more difficult job when sourcing temporary workers, considering that they face the prospect of having access to fewer candidates.
Agencies that previously operated the travel and subsistence schemes could lose money as a result of the changes too, as they feel the pressure to increase or maintain pay rates for workers while perhaps not receiving higher rates from clients.”