Judgement imminent in PAYE test case

An industrial tribunal is expected to deliver a judgement in the next few days on the case of an IT contractor who claims insurance was unfairly deducted from his salary by recruitment agency, Dart Resourcing.
Analyst programmer, Paul Whittingham, argued he had been illegally forced to pay professional insurance indemnity (PII) and administration charges for more than two years, while he was working on a PAYE (Pay As You Earn) basis.
Dart Resourcing maintains it did not acted illegally. However, if the tribunal finds in favour of Whittingham it could mark a landmark case at a time when many contractors face being forced into PAYE status for recruitment as the government proceeds with its IR35 legislation.
Wittingham told Silicon.com: "The original contract quoted a rate and Dart then came back to me with an hourly rate which was 15 per cent less than the quote. They said this was to cover professional insurance indemnity payments. I wasn't given a choice about whether I wanted to pay it."
He added: "The tribunal also concerns holiday and sick pay that I wasn't getting but should have been entitled to as an employee."
Legal expert Kevin Barrow - a partner at law firm, Tarlo Lyons - said forcing employees to pay professional insurance indemnity is not usual practice. "As an IT employee it is sensible to have indemnity insurance but it is their choice, the employer cannot force the person to take it out of their wages," he explained.
The Association of Technology Staffing Companies (ATSCo), a newly formed representative organisation for recruitment agencies, agreed with Barrow. Peter Flaherty, executive director of ATSCo, said: "If a small company wants insurance it is more likely to charge the employee a premium. But agencies don't put a contract together for a PAYE and then deduct money."
Flaherty pointed out: "If the IR35 proposals go through there are likely to be more contractors working for recruitment agencies on PAYE basis to escape the added costs of being a limited company."