A new co-operative offering security to those at the sharp end of short-term contracts and the expanding gig economy launches a unique opportunity in 2019.
The Contractor Co-operative promises people the chance to take control of their working lives in a safe, convenient and community-led way. It will also offer members something most contractors lack: the opportunity for full employment status including sick pay, maternity pay and specialist accounting, legal and financial guidance, along with access to pension advice and support.
There is another key difference from its competitors in the private sector: it pledges to be the antithesis of other umbrella organisations through being fully transparent to contractors and fully tax compliant with the HMRC, ensuring that all amounts paid to employees are fully taxed and accounted for. And, as well as promising a valuable resource of expertise and advice, the co-op says it will provide a democratic platform for sharing information and resources collectively in a wide range of professions.
The past 20 years have seen an astonishing sea change in the nature of work and in the number of people without a traditional employer. According to the Office of National Statistics, the proportion of the UK workforce that is self-employed rose 26% since 2001, while the actual number of self-employed workers has increased by 45%. So the advent of an idea like the Contractor Co-operative is long overdue.
The idea for the co-op was conceived by tax specialists WTT Consulting, which offers contractors support with HMRC issues and problems resulting from a raft of legislative changes in recent years. These changes affect tax liabilities for the growing number of people who rely on contract and consultancy work – but who may not understand the complexity of being fully compliant with the rules.
In a risky field rife with payroll umbrella bodies and third party agencies often avoiding tax and making money out of individual contractors, they decided the co-operative model would offer the perfect structure to those who wish to remain a part of the contractor market but avoid the pitfalls of going it alone and engaging with companies which often make money at their expense.
CEO of the Contractor Co-operative, Chris Mattingly, has a wealth of experience in building and managing successful businesses over the last 18 years, most recently in the insurance industry.
“Evidence suggests that the gig economy is here to stay – it suits engagers who take people on, and workers who want flexibility of employment,” he says. “Accordingly, in an attempt to meet the needs of their clients given the lack of quality provision in the contractor market, the directors of WTT Consulting began to consider whether they could develop a safe solution.
“It seemed to us that a worker co-operative is a perfect structure for those who are at the sharp end of the working revolution. Where it comes into play is providing a safe environment for them to contract with clients so they get a fairer and better deal than they would do at the moment.”
Currently there are two favoured models, says Mr Mattingly: you can work through a personal service company, or through a payroll umbrella company.
“Traditional payroll umbrellas are in business to make a profit for their shareholders at the expense of their employees,” he explains. “While the Contractor Co-operative seeks to be successful and profitable, it exists first and foremost for the benefit of its employees and members.
“The basis of how we have come into being is to provide the individuals who have previously worked through a payroll or personal service company a safer way to contract, working in a company with other like-minded contractors, with all the benefits of ownership and community that go with it.
“The individual will still be in charge of their own destiny in terms of who they work for. However the co-op is there to help them by entering into an environment where they join us as an employee with a supply framework that enables them to contract with the Contractor Co-operative.”
Under the initiative, a proportion of each member-contractor’s income will be retained every month to meet co-operative purposes and progress future projects. Each contractor will have a vote at AGMs and have a say in how the business is run. They will also have opportunity to stand for the board.
The co-op already has an office up and running in the Holborn area of London and a three-strong management board led by Mr Mattingly, comprising Fiona Webber, Graham Webber and Rhys Thomas, which is responsible for day-to-day operations. Its shareholder board will meet as required to decide upon the strategic direction of the business and pass on instructions to the management board.
There is also an advisory panel of specialists including WTT Consultants – and Co-operatives UK, which offered help in setting up and governance issues and now counts the co-op among its members. Not-for-profit pension provider The People’s Pension is also on board to help members in need of advice.
At the moment it is still very early days for the co-operative but Mr Mattingly is confident about the prospects for the year ahead.
“While the idea was conceived at the end of 2017 it has taken us into the middle of this year to get the correct structure so we can engage with clients,” he says. “We are only a handful of members at the moment so the key factor in 2019 for us is going to be growth and we expect to be engaging hundreds of contractors as we work towards 2020, when we are expecting more legislative changes from HMRC.
“The long game is that we would appeal to everyone working in a contract situation. However at the moment we are more likely to attract those who are particularly targeted by HMRC and are looking for new ways to contract.”
He adds: “We would like the whole ethos of the co-operative to be the sense that it is a safe community for contractors where everyone can be a member and have a say rather than working for a corporate body.
“Most contractors are isolated in their own personal service company. This is giving them similar benefits on a larger scale using our community to share knowledge and information as well as offering benefits like sick pay, holiday pay and maternity leave. At the moment we expect to be attracting people like professional project managers, business analysts, engineers and IT programmers but in the longer term it would hopefully be more over-arching and include people like teachers and healthcare workers.
“In the future we also expect to be very much involved with apprenticeships. At the moment we are too small for that but, as we start to grow, we are looking to start apprenticeships and encourage young people moving into the contractor market so they do not make the mistakes others have done.”
- What lies ahead for co-ops and credit unions over the next 12 months? Here’s the online version of our review of 2018, where leading lights of the movement from around the world discuss coming challenges and opportunities