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31 October 2019

IR35: Why the ostrich approach just won’t work

As IR35 legislation and its huge impact on the private sector gets closer, here’s why internal communicators need to be part of the business plan.

Could your organisation be putting its head in the sand when it comes to doing anything about IR35?

Big corporates who often employ hundreds of contractors are starting to move them onto PAYE or waving goodbye in advance of Intermediaries Legislation (as known as IR35) coming into force for the private sector in April 2020.

According to one report, UK bank Barclays is one of them, as are HSBC and pharma giant GSK. In a letter to contractors (quoted online by The Register) Barclays is reported to have said: “As a consequence [of IR35], Barclays will no longer engage contractors who provide their services via a personal services company, limited company, or intermediary.” Nor, it is reported, will the bank extend the contracts of existing off-payroll contractors.

Big employers are not doing this because they no longer need specialist contractors: contractors bring with them skills and experience not available in-house. The big concern is the mammoth process of assessing whether a contractor falls within or outside of IR35 legislation, making sure anyone responsible for hiring is aware of their legal duty to assess potential contractors against IR35 criteria, and the risk of huge fines if they get it wrong.

But, is a blanket ban on contractors or an insistence that they become employees really the answer?

Matt Fryer, a director of Brookson Legal, doesn’t think so. He tells Contractor UK that businesses face staffing and efficiency risks if they open themselves up to blanket assessment. “Businesses which intend to offer their contractors permanent positions, with benefits, will find that they lose the advantages and agility of a flexible workforce.”

Communicating what your organisation’s stance is on IR35 – sooner rather than as the April deadline looms – keeps people informed and could prevent you losing valuable talent or overpaying for project-based contract work that can bring real benefits to your business.

Internal communicators have a huge part to play in this, working with HR teams to define and develop a communication strategy for employees and stakeholders – then to deliver it to raise awareness and prompt action.

Sequel is working with clients to help them communicate complex business issues with simplicity, clarity and creativity to audiences wherever they are. To see how we can best help you, contact [email protected]