Paul Fegan

Associate Trainers and Subcontracting

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If a provider uses associates to deliver training and coaching, does this fall under the subcontracting rules? The individual trainer may be employed by a PSC (Personal Service Company), and this is the entity with which the training provider will have contracted. 

This is the definition of a sub-contractor which seems to capture associate trainers (as opposed to full-time staff used for training and coaching): A subcontractor is a separate legal entity that has an agreement with a provider to deliver any element of the education and training we [the ESFA] fund. This includes delivery of apprenticeship training and/or on-programme assessment for new apprenticeships that started from 1 May

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Martin West

If they are directly employed by you then they are a member of staff, otherwise they are a subcontractor, and the subcontracting rules apply.

HTH

Paul Fegan

Hi Martin - Thank you for the quick response. Your answer is really helpful. I believe quite a few training providers use associates. I think this is going to capture a large number of providers who would not have previously fallen into the definition of using subcontractors? 

 

Martin West

Not sure what Providers mean by ‘Associates’ but this makes it clear.

Subcontractor

A separate legal entity that has an agreement with you to deliver any element of the education and training we fund. A separate legal entity includes companies in your group, other associated companies and sole traders. It also includes individuals who are self-employed or supplied by an employment agency, unless those individuals are working under your direction and control, in the same way as your own employees.

HTH

Paul Fegan

That is really helpful. Although our associate trainers work for a different legal entity, I believe we can rely on the text after the word "unless" to avoid having to comply with the subcontracting rules: the trainers and coaches are managed and directed by us in the same way as we would our full-time employees. Could I ask you please to share where you found that definition? Thanks!

Martin West

Sorry but I think you are misreading the definition from the AEB funding rules as the “unless” only applies to self employed and agency workers, any separate legal entity would be classed as a subcontractor.

Sophie Forshaw

This has been incredibly helpful, thank you. Does this mean that if they are treated the same as one of our employees they are exempt from this ruling. What exactly does  under your direction and control mean? What is the scope? 

 

 

Martin West

Not sure but my interpretation is that they would have a contract of employment with the Provider (be an employee) even though they may not be a permanent member of Provider staff as they are only contracted as and when required or on a temporary basis.

HTH

Kelly Knights

If the associates work for a third party who you are issuing a contract to and that organisation manages them in the same way as their own directly employed staff then its not second level subcontracting. Or If your organisation uses those "associates" and again you manage them in the same way as your own staff then its not subcontracting. 

 

i think when its a whole Training organisation that you have an agreement with it can be tricky to argue that it isn't subcontracting. Hopefully I haven't added anymore confusion

(Edited)

Jeremy West

Just to muddy the waters further, the latest Apprenticeship funding rules say:

P180 You must only use delivery subcontractors that satisfy one of the following two criteria:
P180.1 they are on the published Register of Apprenticeship Training Providers and have applied by the main or supporting application routes; or
P180.2 they are either the apprentice’s employer, a connected company or charity as defined by HMRC and are on the published Register of Apprenticeship Training Providers, having applied through the employer-provider application route.

It is unlikely that associates (via PSC) will be separately registered on RoATP; so if Martin's reference (that because a PSC is a separate legal entity they are therefore subcontractors) is definitive, this may imply that the use of PSCs is effectively forbidden under the rules...

PS don't forget that IR35 now applies to all sectors... you are responsible for determining (and justifying to HMRC) the tax status of your contract staff unless you are a small company yourself (turnover < £10.2m, balance sheet < £5.1m, < 50 employees, pick 2 out of 3).

Cheers,
   Jerry

 

 

 

(Edited)

Martin West

Kelly,

For all subcontracted delivery the staff must be employees of the subcontractor and not just managed by them.

I agree with Jeremy, all employed delivery staff at a provider must be paid via the payroll, no payment of invoice for those self employed allowed as they must be directly employed.

HTH

Kelly Knights

Where does it say staff must be employed? That doesnt fall in line with the definition of a subcontractor

Dan Hodgetts

Kelly Knights is spot on here and this line makes it pretty clear:

"It also includes individuals who are self-employed or supplied by an employment agency, unless those individuals are working under your direction and control, in the same way as your own employees"

An associate works under your direct control and therefore even if not covered under a contract of employment/PAYE etc would not, IMHO, constitute as a subcontractor.

Quite frankly if it did it would put 100s of people out of work as ITPs frequently use "Associates" to deliver training, assessment, IQA etc etc

(Edited)

Martin West

Dan: you are taking part of the definition out of context.

Kelly: they must be employed by the Provider/subcontractor to be under their direction and control.

If you think otherwise I suggest you take the chance and ask the ESFA.

Kelly Knights

I disagree because we have lots of HPLs who invoice us (aeb delivery not apps) and they are part of our teaching team like any other member of staff

Martin West

HMRC have been clamping down on educational providers who do not collect Tax and NI for those who are self-employed, but it is ok to pay other educational providers from an invoice.

Patrick Tucker

Associates and those who are self-employed or supplied by an employment agency are not subcontractors if those individuals are working under your direction and control, in the same way as your own employees. This could be through an associate agreement. This is not as employed staff through an employment contract. There is also secondment agreements. This is common practice and has been for decades. However, the ESFA seem to interpret the rules sometimes to fit their own agenda.

Steveh

I Am Not An Employment Lawyer, but I agree with Dan, Kelly and Patrick here, anyone who is tret as a "normal" member of staff isn't a sub-contractor, regardless of how they're paid.

Paul Fegan

Because of the confusion around this point I contacted the ESFA to get clarification. Their response was that as long as the person is under the main provider's direction and control, he or she will be regarded as one of their own employees and not be considered as a sub-contractor. This is useful to know as it makes it much easier to continue with the arrangements we currently have in place. 

(Edited)

Kelly Knights

I've looked at this a lot for the organisation I work for and have taken a lot of advice - not that I'm saying im an expert.

While the comment from the ESFA helps I would say  be careful how you interpret the wording.

I personally don't believe working with a whole organisation i.e. a provider that delivers for you are "under your direction and control".

AELP gave a great example recently: tutor goes off sick, you bring in a agency member of staff to cover who picks up where tutor left off and they follow the same timetable/scheme of work (hence under your direction and control.) 

 

If they deliver and are able to design the curriculum and you dont have control over how or what they deliver then that is not under your direction and control. 

(Edited)

Tracy Clement

We are currently undergoing an audit by a company that carries them out on behalf of the ESFA and we went back over this question this week after having spoken to the ESFA a few weeks ago. 

They confirm they use 3 measures to ascertain if delivery staff are sub-contractors;

  • Do we direct them
  • Do they use our materials
  • Do we pay the market rate

Then Ofsted have more criteria around Standardisation, CPD etc.

 

Dan Hodgetts

That is super helpful Tracy Clement - thank you!!

By that logic, Associates delivering your training, using your branded materials, at the appropriate market rate - they are not subbies!

(Edited)