IR35: De-risking your future workforce
With the implementation of the IR35 changes now imminent, we’re starting to see organisations looking for alternative workforce solutions that will ensure continuity of their existing projects. And this search doesn’t appear to be limited to the public sector, with private sector companies working on public sector contracts (and therefore potentially falling in scope of the changes) also looking for the best way for their business to ensure stability.
For many of these organisations, this is in direct response to witnessing contractors leaving for new private sector contracts ahead of the shift, as predicted by the Association of Independent Professionals and the Self Employed (IPSE), or requesting rate increases to cover their additional tax liabilities.
What changes are being proposed?
The main change to IR35 proposed by the government is to shift the responsibility of ensuring individuals are paying the right tax to the ‘engager’, where the end client is a public sector organisation. And with the Government estimating that only 10% of PSCs are currently complying with the legislation, there’s a significant risk of upheaval waiting just around the corner.
Rebalancing your workforce
Much of the discussion around the IR35 changes has (sometimes understandably) been negative, focusing on the pitfalls and lack of clarity around the legislation. But, taking a step back from the coalface, this change presents organisations with an opportunity – helping to drive changes that they may otherwise have been slow to make.
We’ve previously highlighted a number of solutions that organisations should consider when de-risking their workforce ahead of April 2017. For those of you who have implemented a temporary option, or are still making a decision on the best way forward – this may be the best chance to rebalance your workforce. One of the many solutions that could help you to achieve this balance is enhancing your permanent headcount.
Who will it affect?
For this round of changes, the legislation will apply in any instance where the end client is a public sector body. So, whether you’re a public sector body who works with contractors or a third party organisation that provides contractor support to the public sector, you need to pay close attention to the changes and how they might impact your organisation. Alternatively, consider partnering with a company like Experis that can put a plan together for you.
The changes will not impact private sector ‘engagers’ at this point, providing that they are not supplying contractors to the public sector.
What are the benefits?
Whilst contractors can often be hugely beneficial to an organisation for short term expertise and projects, they are sometimes deployed in roles more suited to a permanent team member. With the right permanent employees, your organisation is likely to identify:
- Increased retention rates
- Improved in house capabilities
- Reduced risks
- Reduced costs
Historically, businesses have cited the skills gap as one of the reasons they are not able to hire people permanently for these positions, but in many cases they haven’t been looking in the right places, or simply aren’t thinking creatively enough. Does the individual need to meet all of the job requirements immediately, or could you take some time to upskill someone who is 90% right for the role, aligning them with your requirements? Or, if you need a project to hit the ground running, could you use an experienced contractor to run the programme, training your permanent headcount in the process and ensuring that they can lead similar projects in the future?
We’re seeing the benefits of moving to a permanent workforce with a number of our clients. From a government agency looking to make a digital and cultural transformation, to a leading telecommunications provider taking a ‘try before you buy’ approach – with Experis hiring graduates with the right capabilities and upskilling them on the job, giving the business the option of hiring someone who’s perfect for the role and knows the organisation inside out at the end of the two year training programme.
While the process of preparing for IR35 isn’t straightforward, it shouldn’t be seen as all bad news. The changes are coming and your organisation must be ready – but why not take this as an opportunity to shake up your hiring model for the benefit of your organisation? And for public sector organisations in particular, this is a chance to bring the government’s industrial strategy to life by developing their own in-house digital talent.
If you need support maintaining your workforce ahead of the impending IR35 changes, or if you already have a temporary solution in place but would like to take a closer look at rebalancing your future workforce, get in touch today using the form below.