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Top 5 tips for recruitment agencies to tackle IR35
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It’s been almost two months since the IR35 reforms, and it’s undoubtedly been a testing time for all. Recruitment agencies are increasingly having to deal with end-hirers enforcing fear fuelled blanket bans, and in failing to curb them, are losing contractors at an alarming rate.
It’s a challenging situation for all those involved; however, it doesn't have to be a losing battle. Given the present climate, compliance is key: establishing a well organised and risk-free infrastructure to manage your contractors within is essential to persuade end-hirers away from blanket bans, retain your top talent and stay competitive with industry peers.
Keep reading to get our expert take on how your agency can conquer compliance post-IR35 and ensure your best talent stays put...
ENGAGE’s pro-tips:
1) Prepare generic role-type assessments in advance
Analyse historical IR35 SDSs across specific roles and identify common characteristics. From this, you can start to predict whether a worker will fall inside or outside of IR35. This provides a useful outline to work from when carrying out checks and helps you navigate compliance with efficiency.
Please note: this method CANNOT account for individual circumstances, and you must still take ‘reasonable care’ by carrying out detailed contract checks.
✓ Identify common role-based characteristics
✓ Create generic IR35 assessments
✓ Predict SDSs ALONGSIDE detailed contract checks
2) Carry out a broad analysis of your workforce and generalise into role types
You can also examine your existing temporary workforce from a birds-eye view to identify recurring trends. This allows you to categorise roles based on shared characteristics which commonly affect assessment outcomes. With this you can bulk assess your contractors, saving you time and money.
Some will still require individual assessments, however enforcing this as a general rule of thumb will streamline your process and will also give you an in-depth insight into your workforce.
✓ Analyse your workforce from a birds-eye view
✓ Create clear categories based on shared characteristics
✓ Bulk-assess in groups to save time and money
3) Help your workers help themselves: equip them with the right info to independently navigate IR35
Once you’ve got your head around IR35, share your knowledge so your workers can too. Keep open lines of communication with them and identify recurring questions; run surveys, polls, one-on-ones, or anything else that’ll help you understand their needs and deliver relevant resources. With both you and your workforce equipped with compliance, your end-hirers will have less reason to hide behind blanket bans.
✓ Share your IR35 expertise with your workforce
✓ Keep open lines of communication
✓ Deliver bespoke resources tailored to their needs
4) Prepare a backup plan for dealing with ‘inside IR35’ SDSs
Post reform, ‘inside IR35’ SDSs are inevitable, even without the blanket bans, so it’s important to prepare for them. Consider increasing worker pay rates or sharing the burden of deductions as a backup plan for exceptional circumstances and avoid losing talent. If taking this route however, bear in mind extra expenses like Employers’ National Insurance and Holiday Pay (both of which are calculated in addition to advertised rates when on PAYE).
Remember PAYE and NI have varying thresholds, so make sure you understand the impact your rates will have upon workers in different situations i.e., Umbrella PAYE vs Direct PAYE beforehand.
✓ Consider increasing rates/ sharing deductions as a backup plan for contractors ‘inside IR35’
✓ Remember to consider employer costs like Employer NI and Holiday Pay
✓ Ensure you understand the impact of your rates upon workers in different situations
5) Select a reliable tool to manage and store your Status Determination Statements (SDSs)
With HMRC expecting SDSs to be set on a case-by-case basis, it’s vital to keep track as workers move between assignments. Having a reliable system in place to manage SDSs is essential to maintain visibility and will help reassure your end-hirers as they’ll be first in the firing line should compliance issues arise.
Enforcing a tech solution to manage this can be especially effective as it offers the potential to centralise your information, reduce human error and enable on-demand access. With ENGAGE you can store SDSs alongside your placements and keep them visible to your whole supply chain digitally. With this your end-hirers can view your compliance strategy in real time giving them less reason to insist on blanket bans.
✓ Enforce a reliable tech solution like ENGAGE to keep track of compliance
✓ Centralise your info, reduce human error and access data on demand
✓ Stay visible and avoid penalisations for your end-hirers
Don’t let end-hirers drive out your talent! Crack down on compliance
Whilst blanket bans may seem like a quick fix, it’s vital to keep them at bay to prevent your workers from walking out on you. In following these steps, you can adapt your IR35 strategy for success, establish positive client/ worker relations and ultimately maintain your competitive edge!
Click HERE to find out how ENGAGE can help execute your IR35 strategy.
