How Hays IT says clients can prepare for IR35 reform

As we wait to know exactly what effect Brexit will have upon the availability of contract opportunities, it’s clear that the availability of talent is now tempering the optimism of organisations, even as their hiring continues, writes James Milligan, director of Hays IT.

And while skills shortages are very much a driver of recruitment plans – as we outlined on ContractorUK last month, there is another, much more one-off challenge that organisations are now under pressure to move fast in response to if they want to capitalise: IR35.

So preparing for the introduction of IR35 reform in the private sector affects the many organisations which plan to recruit freelance or contract professionals this year, ideally by them learning valuable lessons from the public sector. Carrying out these preparations now will make organisations less vulnerable to avoidable cost and risk. It will also ensure they should get continued access to highly sought-after contractors.

Private sector off-payroll working plan: phase one

The initial steps for commercial organisations to take are four-fold. Firstly, contractors’ end-users should understand their contingent labour estate and identify the ‘critical’ contingent labour in their workforce.

Secondly, they must understand that although different areas of the organisation will have differing responsibilities with regards to the legislation, it is vital that all the different areas work together and communicate clearly.

Thirdly, organisations due to be affected by the April 2020 rules should be allocating resources now to implement the legislation, including identifying any specialist needs the organisation may have to bring in-house, so large projects can get over the line.

Last but not least, affected organisations should have a ‘self-education’ process and should standardise their onboarding procedures.

And then four more steps

Bear in mind, the above are only the initial steps. The secondary steps we believe engagers ought to take include the following -- another four-fold set:

• Vital communication of the IR35 changes and preparations to ‘in-scope’ workers, and the protection of important business relationships.

• Consideration of who in the organisation will be responsible for communicating ‘actions,’ and who will take the ‘next steps’ regarding IR35 to your contingent workforce and when.

• Reflecting the realisation that because IT contractors will want to know if they are in-scope, knowing how they will be treated, and ensuring relevant managers know too.  

• The timely issuing of communications, notably once you have the adequate framework in place. These communications should go out in plenty of time to avoid losing in-scope workers to more prepared organisations.

This could be unsettling

It should go without saying but, for good organisations, the relationships with their contractors are important. These organisations should therefore note that for those individuals in-scope, it could be an unsettling change for how they are used to working. One way for engagers to combat this is to consider employing an expert third-party to offer support through the process. Having supported several organisations in the public sector since the introduction of the off-payroll rules in April 2017 with written guidance materials, we know that such practical resources can really make a positive difference.

Yet part of the work that us as recruiters have to do is instilling confidence in contractors that the solutions offered by agencies are suitable, meaning the right products and people are in place to determine the correct IR35 status. This is the message contractors have sent the agency sector rather loudly, and clearly.

Get your 2020 strategy down, now

But if you’re a mid-sized company or large corporation that engages contractors and you haven’t already begun, prepare your ‘Off-Payroll Working for the Private Sector 2020’ strategy right now. In a skills-short market, this will ensure your organisation is able to access and compete for skills your operation will need to undertake change and complete projects in a time and cost-effective manner. Looking at a variety of ways to attract skilled IT contractors has always been on the agenda for engagers, but it is now set to become essential, especially for those that are concerned by pay inflation and increasing rate expectations.