Before the Government made an eleventh-hour shift away from the IR35 Private Sector reform, most organisations had already defined and commenced execution of their IR35 strategy. What lessons can we take from how previous plans were managed and implemented?
Timing is key
As organisations began to digest the legislation and make sense of what data and information they would need to evaluate their PSC contractors, it became all too clear that IR35 is a complex topic. To make accurate status determinations, demonstrating reasonable care, businesses needed a good knowledge of the working practices of each individual contractor – and Hiring Managers needed the training and support to make the correct determinations.
Underestimating the time this large piece of work would take, meant IR35 suddenly become an extremely time-consuming project for some organisations – and one that in hindsight they wished they’d started much earlier.
Communication is everything
Whilst organisations were certainly busy behind the scenes preparing for IR35, it was crucial that regular communication was maintained with PSC contractors, and any other stakeholders in the supply chain. Some contractors took to social media to vent their frustrations over a radio silence, or irregular communication that failed to keep them informed when preparations originally began.
It’s important to remember that whilst an off-payroll contractor is not a member of the organisation’s workforce, they still engage with your business and your brand – highlighting the need for regular communication that’s fair and transparent.
Avoiding a one-way approach
As the media began to notice how large blue-chip companies were managing IR35, news started to break of companies initiating blanket In Scope determinations, or PSC bans.
Some organisations chose to cease working with PSC contractors – a move which whilst ensured HMRC compliance, saw contractors exiting their projects on mass. This tough line approach left contractors feeling frustrated that they were given no option but to re-engage on PAYE or Umbrella terms.
Similarly, those companies who took an all-in approach to IR35 status determinations were met with a large number of disagreement disputes – from contractors who felt this approach did not take into account their personal circumstances.
These high profile examples cemented the decision for many organisation that a one-way approach would not demonstrate reasonable care had been taken to determine IR35 status, and that whilst IR35 has it’s complexities a careful balance would be needed between ensuring compliance and maintaining good working relationships with the contractor community.
If you’d like to arrange an IR35 contractor workforce review, then contact NRL at [email protected]