https://www.gibbshybrid.com/articles-insights/thought/can-we-survive-without-contractors-the-dangers-of-limiting-a-flexible-workforce/

Thought Leadership

Yes

Can we survive without Contractors? The dangers of limiting a Flexible Workforce.

October 16, 2019

The spectre of IR35 hangs over British business, just like Brexit. Unlike Brexit, however, we know precisely when IR35 will come into force – April next year – and what it contains. Here at Gibbs Hybrid, we’ve set up an IR35 Countdown Team, dedicated to thoroughly preparing our clients and contractors for this event.

The Association of Independent Professionals and the Self-Employed (IPSE) believes firms who stop using contractors and hire only PAYE is a sign of the damages the legislation will bring with it. The motive behind this move is to circumvent the IR35 regulations which will come in to effect in the private sector in April 2020.

Andy Chamberlain, IPSE deputy director of policy, said: “For a long time, we at IPSE have warned the changes to IR35 will have damaging consequences for business. Decisions to remove contractors and only focus on PAYE is harmful not just to the self-employed, but also to companies themselves, as they lose out on the vital flexibility and financial boost that ‘outside IR35’ contractors provide.”

Matt Fryer, group compliance director, Brookson Legal, the only regulated law firm which focuses on IR35, said: “By taking this knee-jerk approach and only working with contractors under PAYE, companies may limit its flexible talent pool. We recently spoke to over 500 skilled contractors, and 37 per cent told us they would never consider working under PAYE, while 59 per cent would consider moving to another company that does advertise roles outside of IR35. 50 per cent would only move under PAYE if it were ‘made their while’, which raises the question of whether firms will increase net pay or offer employee benefits. Businesses which intend to offer their contractors permanent positions, with benefits, will find that they lose the advantages and agility of a flexible workforce.”

It will, make no mistake, be disruptive. However, Gibbs Hybrid’s statement of work (SOW) projects under a “Hybrid Consulting” employed model into those projects means that we are in a unique position to navigate successfully through IR35 deployment. We pivoted largely to SOW and consulting engagements around a decade ago and built our reputation on services and outcomes hiring talented individuals to fulfil customer requirements.

Our experience tells us that the most significant change will have to be among our clients’ line managers. The specialists we deploy are Gibbs Hybrid’s responsibility, so they report to us, we stay clear of furloughs and offer a suspension of services instead. 

So how to approach this as a client needing scarce talent to deploy IT and other technology and change projects? 

In our experience working with IR35 issues inside the public sector, the secret has been open, trusting partnerships between, and among, clients and their consultancy partner. We have a common goal that is unchanged – deploying the best people to manage and implement important services and projects. I don’t believe it’s the moment for unnecessary competition over pricing or other factors. Our mantra is regulatory risk mitigation and compliance for us all.

It’s a learning curve, to be sure, and we’re all on it – be assured that Gibbs Hybrid has the experience, governance knowledge and capability to mitigate the impact of IR35 on our clients’ business operations and project effectiveness.

For more information, please contact our team at [email protected]

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