Will IR35 impact the contingency trend?

The trend toward contingent, flexible working has been driving change in recruitment and hiring practices for years – and it’s been pushed by both workers and hirers alike. With skills short and needs uncertain, flexibility has become the best possible option for everyone. And for some contractors, treating themselves like a rentable resource while reaping the rewards of another business’s ongoing needs has offered the best of both worlds.

The upcoming IR35 change, though – swapping responsibility for correctly paying tax from worker to hirer – may be enough to shift things back a step. Recruiting experts have experienced blurred lines between types of workers, and continuing in this way could be very risky indeed. Treating contingent workers like permanent staff without taking responsibility when it comes to tax could bring fines, reputational damage, and more paperwork than you’ve seen in your life. The most risk-averse approach might be to step back from contingent workers altogether.

I think it’s very likely that for some businesses, in some cases, moving toward permanent staff will make complete sense. After all, one of the main criteria behind identifying in-scope workers is that, if you didn’t have them working on an ‘temporary’ basis, you’d have to hire a full-time equivalent to do the same job. So, if turns out you would have to anyway, it might make more sense to just… do that. Filling a position with a salaried employee, rather than paying a ramped-up day rate, might even save you a few quid. And unless that one particular contractor is genuinely irreplaceable, you won’t even know the difference.

In very many cases, however, the benefits of being able to effectively use contingent workers are too significant to discard. The days when employees expected to sign on the dotted line and work at the same company for decades have gone – many more businesses are working toward short-term projects rather than strategies spanning years. You need to know you can quickly mobilise a team or department toward an immediate deadline, rather than worry about the expertise you might need in two years. And contingent workers have certainly capitalised on this in sectors such as tech and engineering; finding someone with a particularly niche skill set who’s ready to hang up their freelance boots and go perm is like finding that proverbial hen’s tooth.

Business agility is also not going anywhere, either. The rapidly accelerating pace of change in tech is reaching everyone from billionaire CEOs to retail staff. Nobody really knows who they’re going to need in two years anyway, and bringing someone in when they may end up costing you in redundancy later is an obvious mistake. The IR35 change might put a slight damper on things, but in the long run, it isn’t going to make the essential advantages of a more flexible workforce less appealing.

What relevant parties need to be asking themselves is this: how responsible am I being, and how aware really am I about who is sat under my roof? Understandable data, clear understanding, and smart decisions about your workforce will make the difference between an agile and just plain messy. Rethinking how we engage workers and breaking down siloes of data between talent populations can have incredible benefits. What nobody needs, however, is muddied waters.

Recruiters, employers and hiring managers alike all need to have a crystal clear understanding of how and how long for they want to fill a role. The moment that situation changes, and the need for a particular role shifts, being fully informed will be crucial. If you’re concerned about who exactly is sat under the banner of ‘temporary’, ‘contractor’ or other, the time to clear the situation up is now.

The answer, in the immediate-term, is to bring in someone to evaluate your contingent workers. Research published earlier this year found that 77% of contractors have little to no confidence in businesses’ readiness for IR35. And on November 1st, it was found that a third of businesses who regularly engage contingent workers aren’t even aware that IR35 will impact them from April onwards. Anybody who might fall into those statistics is in prime position to call in the experts.

From then on? The legislation will keep impacting on your workforce on an ongoing basis. The solution in the long-run is an arrangement, through transparent systems, that gives complete workforce transparency. An example is Capita’s strategic partner, Adepto. This market-leading talent pooling tech offers a helicopter view of every worker in one place, so that you never need worry about who’s done what, when and for how long again. Vendor management or applicant tracking software can offer greater visibility, and if your contingent situation simply seems too complex to ever get a grip on, Capita’s MSP (managed service provider) service could offer the control you’re looking for.

When big changes come along that you never would have asked for, there’s always an opportunity to take stock and evaluate. What the prospect of IR35 reform has perhaps brought into focus is that losing sight of who is in your business and how long they’ve been there for is not a desirable situation. Once the immediate problem is dealt with, you need a data-led solution, that gives you the information you need, when you need it.

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