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Contractors risk liability over minimum wage rules

As TUC general secretary Brendan Barber calls for minimum wage to increase 21p to £6.14 per hour, tax consultant Accountax has warned of 'the significant risk' already facing the construction industry following the introduction on October 1, 2010 of the National Minimum Wage (NMW).
This saw an increase of 13p to £5.93 per hour, which equates to an actual total of £7.27 per hour when including an allowance for holiday and employer's National Insurance.
'The big question that construction companies have to ask themselves is if they are sure that their labour agencies are complying with MSC legislation. If their labour rates have not recently increased to account for the new NMW, then this could point to non-compliance. It's time contractors started looking at more than just price when they are hiring workers,' said Matt Boddington, managing director of Accountax.
He said he believed many rogue agencies were forcing workers through limited companies, falling foul of MSC legislation and exposing their clients to potential risk, which could run to millions.
Philip Andrews, managing director of recruitment consultant Workmates, warned: 'The industry as a whole has suffered over the last two years; with budgets significantly reduced this means pressure on the supply chain to make even more savings.
'However, few are aware of the risks under the MSC legislation. Informed contractors are already carrying out thorough audits of their labour suppliers, we urge more to do the same to prevent longer-term damage to their business.'
Mr Boddington added: 'Any contractor whose workers are ultimately engaged by a company falling foul of the vague definition under this legislation is potentially exposed to a bill for PAYE and NIC on those workers - even if those workers were paid by somebody else. Reassuringly, main contractors are beginning to recognise the risks and have been approaching us to carry out thorough vetting of their supply chain.'
29 October 2010


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