How will IR35 shape your workforce in 2021?

In the lead up to, and well after the implementation of the April 2021 IR35 changes in the private sector, organisations across the UK will be reassessing the way they structure and manage their people. Despite the concern that has been expressed by both contractors and end clients surrounding IR35, there is a unique opportunity for businesses to take a step back and revaluate the composition of their workforce. This should include the way they manage talent, achieve organisational effectiveness, and approach workforce planning. 

Accounting for approximately one-fifth of the UK workforce, contingent workers are a fundamental resource for UK businesses. These professionals will continue to play a vital role in providing specialist experience, delivering large-scale projects, and ultimately driving businesses forward in a market of almost constant change. It is important that businesses are aware of and fully comprehend the impact that IR35 will have on the way they interact with this talent.

To better understand how organisations are likely to be affected by the changes, we partnered with Change Associates to determine how best to prepare for IR35 and what can be done now to future-proof the contingent talent pool.

Redefining the way businesses engage the contingent workforce

As part of our research, we surveyed more than 350 contingent workers to gauge the sentiments in the market and the level of understanding of IR35. We also interviewed experts and leaders who have already experienced the enforcement of IR35 in the public sector.

The findings of this survey were presented at our joint event with Change Associates, ‘The Shape of the 2020 Workforce: the impact of IR35.’ To explore the challenges and opportunities, we were joined by keynote speaker, Matthew Taylor, Chief Executive at the RSA and Director of Labour Market Enforcement for the Government, and panellists Catherine Hearn, Director of Resourcing and Talent at the BBC, Keith Robson, Interim Chief People Officer at FutureLearn, and Doug Rode, Senior Managing Director at PageGroup.

In July 2017, Matthew published the report, Good work: the Taylor review of modern working practices, an independent review of modern employment, commissioned by the UK Prime Minister. Matthew described IR35 as a levelling of the playing field that necessarily strengthens the links between employment status and tax status.

However, quite alarmingly, a lack of understanding has led some large organisations to terminate contracts with all their contingent workers. This is a costly and damaging knee-jerk reaction.

Doug Rode also expressed concern about the number of organisations looking for a workaround rather than seeking a way to address IR35 head-on.

Matthew concluded by emphasising the need to create great working cultures, which he defines as creative communities with a cause. This can be done by ensuring:

• A sense of purpose
• Teamwork
• Fairness
• Autonomy

During the panel discussion, Catherine Hearn highlighted that while IR35 may appear to sit with procurement or finance, it is all about people. “It’s about transparency, fairness and compliance. People don’t feel safe, so talk to them. Be honest. Be clear. Talk to them now”.

Keith Robson rightly pointed out that when it comes to IR35, it is the horror stories that get airtime, which is why many people are so concerned. This reiterates the importance for contractors, end clients, and intermediaries to take the time to understand what the changes are, what it means for them, and how they are going to make it work moving forward.

Preparing for the April 2021 IR35 changes

The key takeaways from the research we conducted were summarised into three clear steps for businesses to use as action points.

Get help

It is key to start the process of preparing for IR35 as early as possible. If you haven’t already – get help. The best way to manage the risks associated with the changes is to analyse them through auditing your current position. In addition to this, learn from what others have done. Businesses in the private sector are at an advantage as the public sector has already been through the changes.  

Get talking

Communication is key to ensure key stakeholders are all on the same page about IR35. This means having conversations with your contractors, discussing status determinations and options moving forward, together. It is also key that any intermediaries such as your recruiters are kept in the loop about the decisions you are making. They can also be key in helping identify the status of your assignments.

Ideally, businesses need to get to a point where they are utilising a blended model when it comes to building their workforce. This approach has been labelled as the Build, Borrow, Buy approach.

Get organised

Your finance, HR, and procurement teams will be key in the lead up to and management of the longer-term impacts of IR35. So, start planning the processes that will support your new workforce model. In addition to this, be sure you maintain a strong working relationship with your recruitment partners to ensure they are working to support your new business objectives.

For further insight into how you can prepare for IR35 and implement this model, be sure to download your free copy of ‘The Shape of the 2020 Workforce and the Impact of IR35’ here.

Do you need help with IR35?

We’ve combined the resources of PageGroup and Change Associates to create a comprehensive solution for organisations preparing for IR35. For more information about how Change Associates can support you in ensuring you’re ready for April 2021, get in touch today.

If you would like to explore how we can help you attract and secure the right talent for your business during periods of transformation, rapid growth, or to support large projects, contact your local Page Outsourcing team.

This material is intended for general information purposes only and does not constitute legal advice. Specialist legal advice should be taken in relation to specific circumstances.