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Hiring in the New Normal

October 15, 2020

2020 has been a tough year for employers, the contractor market and freelancers. Uncertainty over changes to the off-payroll tax IR35, and a global pandemic that has decimated the job market and has left everyone wondering whatever will happen next.IR35 is comingIR35 has been in the pipeline since 2000. However, it has taken until recently for the legislation to come into force. Despite a number of challenges to the Finance Bill and a damning report in the House of Lords, the changes to the off-payroll tax look with certainty to come into effect in April 2021.Whilst this delay is welcome news for some, many businesses have already prepared their IR35 strategies, and as such it is likely that many organisations who are looking to hire a workforce quickly post the COVID-19 down-turn may adopt a risk-averse approach by imposing wholesale bans on PSC (Personal Services Company) contractors, meaning that they only have two choices – to employ people on permanent PAYE contracts or to hire contracting staff through an umbrella company.Talent GapsWith many organisations looking at restructuring or only concentrating on key projects, the need for a flexible workforce primarily made up of contractors and freelancers will be crucial to getting up and running quickly. However, as the number of PSCs shrink, and with many unregulated umbrella companies in the marketplace, being able to tap into the diminishing contracting talent pool is becoming more and more difficult. The ability to fill interim roles or finding the right capability to deliver time-bound critical projects could become a thing of the past.The burden of complianceThe onus of ensuring IR35 compliance lies with the employer to determine the status of each of their contracting staff. This also means that any irregularities will also impact on that employer who will have additional tax requirements, including income tax and National Insurance contributions. For many, this additional paperwork burden is too much to focus on, leaving them with no choice but to not work with contract staff.Ultimately, this will cost additional time and money, both in finding the right members of staff, the burden of risk associated with permanent employment when really short-term fixed contracts would be a preferred option to meet project delivery requirements, having to spend more precious time on recruitment, and potential compliance activity when ensuring that business stability is the primary focus.How can Pendragon Consultancy Help you?The team here at Pendragon Consultancy has decades of experience working within the contractor market, and we are exceptionally diligent in our approach to compliance and legislation.Moreover, we can provide assistance with IR35 assessments or if your contractors are found inside IR35 alternative employed solutions like ReWorked, which prevent the contractor from “ no rights employment”.

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