Armageddon is approaching for the contracting market!! Or so many would have you believe; however, the fact is that come April 2021 and beyond, contract workers are still going to be in high demand as interim work still needs to be fulfilled. We will all survive!
Our thoughts are that it’s a bit like Y2K all over again and when we wake up on the first new IR35 business day of April 2021 it will all be absolutely fine as it was on January 1st, 2000 (hangover excluded).
Maybe a closer analogy is that it is more like GDPR day 0 when things are essentially the same but it just works a bit differently. Relative to either analogy it will all be OK come April 7th, 2021 and the contract world will still exist. But only if you are suitably prepared and up to speed on what this means for you and your market.
For the recruitment market in general we will just have to adjust and act accordingly, fundamentally in terms of structuring the payment methods for each vacancy to satisfy (where applicable) HMRC.
The mechanics of then recruiting for that vacancy remain the same as they have always been. I.e. the job pays what the jobs pays and recruiters then go to market to find a pool of suitable applicants to subsequently submit a shortlist to their client for said job. The alternate scenario is that the contractor charges what the contractor charges and then recruiters communicate to their clients that this skill set now costs £x more than before to account for the tax requirements. A bit like inflation perhaps.
Either way, the mechanics are the same in that recruiters have a budget from a client and a budget from a candidate to work and negotiate with. It’s not at all different to how it has always been in that respect and recruiters have never held the decision on the payment dynamics really anyway.
Now for employers, you can and will still need to hire temporary workers for maternity covers, secondment covers, projects, year-end busy periods…etc, etc and this is not going to change.
Equally, there is still going to be a huge population of interim workers who want to continue to work as an interim for a multitude of reasons: lifestyle, nature of work, varied experiences, visa requirements – just to name a few.
In short, IR35 does not mean that employers can no longer hire an interim/temp/contract worker after April 2020. They absolutely can and absolutely will.
The IR35 changes simply mean that when employers hire an interim/temp/contractor and the role is inside IR35 [which the employer now determines] that worker is then bound to paying employment tax and so must be paid accordingly via a PAYE model and not via a PSC.
End clients/employers need to ensure they are working with trustworthy, compliant, and diligent agencies to ensure that this is communicated and managed correctly. And interim workers need to be working with trustworthy, compliant, and diligent agencies to ensure that this is communicated and managed correctly in terms of the dynamics and amounts they get paid.
There will be plenty of challenges and bumps in the road but let’s be honest there always is, Lehmans and Brexit to name two monsters we survived; the main challenge here is acquiring the correct knowledge around all the potential ways of contractor pay and the subsequent communication to both clients and contract candidates. If recruiters take the time to understand all the details and work with their contacts, then we will all be good to go and the contractor market can thrive.
And come April 2021 there will still definitely be a need to go, so ensure you are ready to do so.