After months of uncertainty and despite the UK falling into a recession, it would seem that green shoots are finally starting to appear in the market and fingers crossed, the remainder of 2020 will be the start of the economic recovery. With IR35 now confirmed and looming large, many that are self employed are now at a crossroads and considering their long term futures.
History has a tendency to repeat itself and whilst the market is currently in the favour of hiring organisations, when the economic recovery starts to gain more momentum and as we saw in 2008, the demand for a flexible workforce and specialist skills will inevitably increase shifting the dial in the opposite direction and potentially very quickly.
A key consideration for businesses looking to take advantage of a flexible workforce as part of their recovery strategy should be mindful that the April 2021 off-payroll reforms are on the horizon and therefore having the correct engagement measures in place now will prevent any upheaval come April next year. Old methods of hiring contractors based on a job description will need to change unless hiring on a FTC or inside IR35 contract come April.
Businesses that embrace IR35 and want to continue engaging genuine contractors on an outside IR35 determination can still very much do so and will have a distinct advantage over their competitors that have decided to enforce a blanket ban on PSCs in order to avoid perceived risk of non-compliance. As it stands, the ripple effects of Private Sector IR35 reforms have not yet been felt in a buoyant and competitive market. Maybe I’ll be proved wrong but I am almost certain we will start to see companies reversing their blanket ban decisions over time.
For businesses that have not already done so, it’s important to start getting IR35 preparations underway. Now presents a great opportunity to start embracing IR35 and engaging contractors through compliant and innovative engagement/supplier models. Doing so now will allow for fine tuning processes and limiting potential business impact come April 2021 – There will not be any second chances thereafter.
There is no silver bullet to IR35, education, ongoing performance management, contractual governance and compliance will need to be maintained. Many organisations recognise the advantages of a well defined set of deliverables and outcomes, but naturally some businesses are less in favour and see it as an administrative burden, and it’s in these scenarios where education and support is required. Genuine contractors I have worked with throughout my career prefer their engagements to be well defined and in most cases are always willing to contribute when it comes to defining project scope and agreeing timescales if required.
With many businesses now choosing to have their permanent employees based remotely, maybe embracing a deliverable and outcome based approach to engaging contractors could be the catalyst for change in the way permanent employees are performance managed in the future?