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Engaging contingent workers ahead of IR35 and beyond

Ann Swain, CEO - Association of Professional Staffing Companies

If there’s one thing that the global pandemic has led to it’s a greater understanding that flexible workforces can be hugely valuable to businesses. Never before has it been so evident that the ability to scale workforces up or down as required is crucial to a company’s success. The value of contractors in delivering temporary solutions without the permanent increase in headcount is certainly much clearer.

The challenge now, though, is engaging with these professionals and developing relationships with them and the staffing companies that place them – particularly with the private sector roll out of off-payroll rules on the cards in the next few months.

Keeping crucial relationships in place
Sourcing and engaging with a flexible workforce is challenging. With contractor numbers increasing, knowing where to find the best contingent professionals before the competition and engaging them in between projects is no easy task. That’s why so many employers have historically turned to specialist recruitment professionals to manage these relationships.

Staffing companies have the insight into when an individual’s contract is nearing an end and what type of project work they are looking for – invaluable information that has proven beneficial to so many businesses in the past.

However, with the new roll out date of IR35 into the private sector looming, the relationships across the entire contractor supply chain are at risk of being fractured. Employers are facing the unenviable task of determining a contractor’s status while also trying to mitigate the risk of challenges from HMRC. Consequently, many are choosing to err on the side of caution by implementing blanket bans on contractors operating through personal services companies.

Engaging contractors as they want to be engaged
While there’s understandably a compliance concern for employers engaging contract professionals, we simply can’t overlook the fact that these individuals have chosen this working option. They operate as they do because they genuinely intend to be engaged as a business. Failure to accept this could prove to be a disadvantage for any end client seeking to engage the best flexible talent to support future growth. There’s no doubt that word of mouth will spread across the contract community if a disgruntled individual feels that their employment status determination was incorrect or mis-managed.

Of course, that’s not to say that every individual is correct when they claim that their role falls outside of IR35. But if this is the case, communication with the individual and the staffing company they operate through will help keep these individuals engaged. Explaining why the result of their Status Determination Statement (SDS) was inside off-payroll rules will pre-empt any challenges and mitigate potential disruption in the future.

Working with recruiters and contractors
Recruitment firms are engrained in the staffing arena on a daily basis and in many instances have the experience and knowledge of the hiring tools and software that are available in the market. Perhaps more importantly, they know the pros and cons of each tool, which could save HR teams a wealth of research in the long run. This is particularly true when it comes to IR35 status determination tools.

As a case in point, many staffing businesses were well aware of the flaws of HMRC’s own status determination tool (CEST) ahead of the original roll out date. As a result, we found that a number of our members were working with end-hirers and providing guidance on the alternative status determination tools available – or were at least able to point them in the right direction to seek guidance and ensure that contractors could still be employed compliantly.

For already over-stretched HR resources, it really is crucial to utilise the knowledge and experience of any third-party suppliers – including staffing companies – to ensure your business is not only compliant, but is also set up to be able to engage contractors both now, and in the future.

And speed really is of the essence now. Naturally the global pandemic has been the biggest focus for us all in recent months, but IR35 is only a few months away. No one should be lulled into a false sense of security with the belief that this could once again be delayed. Considering the difficult times that businesses have already experienced this year, failing to adequately prepare for off-payroll regulations simply isn’t an option.

Maintaining an agile future
I have absolutely no doubt that agility will be the key to keeping businesses ahead of the curve in a post-Covid world. The future of work doesn’t look like a wholly permanent workforce. It’s a combination of this and project-based assignments, with the latter set to play an increasingly important role. And in order to thrive in this environment, HR teams and staffing companies alike need to work together to ensure contractors can be engaged in a way that works with their working style, without compromising on compliance. Without this collaboration, employers could be risking their future strategic talent success.

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