GLA Brief
Issue 1 – 2009:
Travel Schemes and Umbrella Companies
This Brief contains guidance for GLA licence holders who operate travel schemes (also known as travel and subsistence schemes, dispensation schemes or mobile workers schemes) and for those who use the payroll services of an umbrella company. It has also been issued to labour users, and organisations representing workers.
These schemes may breach Licensing Standards regarding minimum wage (2.2), work-finding fees (7.1), and tax /National Insurance (2.1).
Background
The GLA is aware that a growing number of labour providers are operating „travel schemes, or referring their workers to umbrella companies who operate travel schemes. Under these schemes, workers generally sacrifice income before tax in respect of travel and subsistence expenses, and in return receive tax free travel and subsistence payments from their employer under a Dispensation issued by HM Revenue and Customs (HMRC).
We have previously confirmed that umbrella companies, or payroll companies who employ workers directly, must hold a GLA licence. The use of an unlicensed umbrella company would constitute a criminal offence as well as a breach of GLA Licensing Standard 8.1.
Application of GLA Licensing Standards to Travel Schemes
Following HMRC advice, we can now confirm that some travel schemes operated by labour providers or umbrella companies could breach GLA Licensing Standards. In particular, travel schemes may breach the requirement to pay national minimum wage (Licensing Standard 2.2), the prohibition of work-finding fees (Licensing Standards 7.1), or the requirement to accurately calculate and pay tax and National Insurance (Licensing Standards 2.1). GLA and HMRC will be reviewing existing schemes in joint inspections of labour providers to establish whether they are compliant.
This new guidance will affect all licence holders who operate travel schemes or use the services of an umbrella company that operates a travel scheme.
With effect from 17 February 2010, we will assess compliance with Licensing Standards in relation to travel schemes in accordance with the guidance set out below.
Existing schemes may now be deemed to fall foul of Licensing Standards such as the national minimum wage, even if they had previously been classed as compliant with those standards.
