Contractors set to reject IR35 payrolling in April

A quarter of intermediaries expect public sector outfits to foist fixed-term contracts on PSC workers from April - but one in three such contractors won’t accept them, a study shows.

Uncovering this “mismatch” between PSCs’ intentions and the options clients and agencies favour ahead of IR35 reform in seven months’ time, the FCSA said it was a “real concern.”     

“Contractors are simply not going to accept fixed-term contracts”, says Julia Kermode of FCSA, which found 26% of clients want such terms for PSCs, but 38% are set to reject them.

“Given the UK’s reliance on the flexible workforce to support the UK economy, we strongly urge [prime minister Theresa] May and her policy team to ditch these proposals now. 

“Not only are they impossible to implement but, based on this evidence, will starve them of the very skills they need, and never more so than now as contractors will be key in helping to manage the UK’s exit from the EU.” 

There is another mismatch. Almost 40% of agencies say they will have to payroll PSCs from April; 23% say the client will do it but, either way, a third of PSCs are primed to refuse, found the FCSA.

“It is unthinkable that it [the government] might be prepared to jeopardise losing this essential workforce,” said Ms Kermode, the CEO of the Freelancer and Contractor Services Association (FCSA).

“We are already seeing contractors not accepting public sector contracts beyond April 2017 due to the proposed changes…[which risk] forcing the entire [freelance] workforce to be employed.”

The upshot of this “incredibly outdated stance” is that it will prompt currently UK-based PSC workers to take their prized skills elsewhere, and not just to another sector, the association warns.

“It is a no-win situation…29% [of intermediaries] are aware that contractors will be actively looking for work outside the public sector as a consequence of the proposed changes,” it said. “[But] beyond the private sector is a physical and virtual global world of work that is hungry for the skills that the UK public sector has access to, and government ignores this at their peril.”