Are EOR and AOR providers the answer to IR35?

The recent changes to #ir35 in the UK have been met with confusion and uncertainty by the #contractor workforce. Despite its good intentions, the implementation of IR35 has been seen as a failure, with many contractors feeling unfairly targeted and disadvantaged.??

Additionally, the cost and administrative burden of complying with the new rules has fallen largely on end hirers, who have been tasked with determining the IR35 status of these contractors and meeting #hmrc often confusing reasonable care hurdle and case law. This has created an additional compliance burden for hirers and resulted in many businesses feeling concerned that using a contractor workforce could see them faced with large bills and fines if managed incorrectly.???

But what if the UK could learn from other countries and adopt a different approach to regulating the contractor workforce??

The EOR / AOR Model?

Enter the world of #eor (Employer of Record) and #aor (Agent of Record) arrangements. We’ve seen these become commonplace around the world, particularly in regions where the use of a contractor workforce is growing such as the US, Europe (France, Germany, Netherlands), and Asia (Singapore, Australia, and Japan).??

In this model, large providers act as both the employer of record and agent of record for contractors, providing in this instance HMRC with enhanced audit opportunities and handling of all the administrative tasks on behalf of the Contractor and the Hirer.??

Benefits to Contractors??

A UK adoption of EOR/AOR models would allow contractors to focus on what they do best – providing their services – while the provider handles the administrative and compliance requirements and they are assured expert compliance personnel are reviewing their status impartially.

Not only does this model provide a clear and transparent way to determine who is responsible for administering a contractor's employment status (IR35 in the UK), but it also ensures that contractors are properly compensated and receive the benefits they are entitled to.

Benefits to Hirers?

It’s not just Contractors that would benefit from the adoption of this model in the UK, these providers also significantly reduce the compliance burden and risk on end hirers, providing total reassurance that the contractor workforce they are hiring complies with the country’s employment laws and regulations.??

Benefits to Recruiters

EOR and AOR providers take the administrative and back office hassle away from the recruitment and staffing firms, allowing them to focus purely on search and selection and servicing their client's needs. This model places all the administrative and compliance responsibility clearly on the EOR or AOR provider.

The UK temporary labour supply chain needs to work together.?

However, adopting this approach would require the UK to take a more proactive and collaborative approach to regulating the contractor workforce. HMRC, clients, and providers would need to work together to ensure that contractors are treated fairly and equitably and that the benefits of flexible working are available to everyone.

Could this really be the answer, or will the pending EU regulation on IC classification be a further example of governments and regulators putting fear or losing grip on taxation ahead of innovating and harnessing the power of the contemporary workforce?