5 Things I Know - SME: Gemma Macdonald on IR35

Gemma Macdonald, Chief Operations Officer at Capita Resourcing shares her expert opinion on the IR35 reform being extended to the private sector in April 2020 and what it means for organisation's contingent workforce strategy.

Government have missed an opportunity with IR35 for the private sector
By not including SMEs in the legislation, in effect we may expect to see a two-tier labour market, where the rules of engagement are different. Government has made this conscious choice to rightly support small business growth, but it may unfortunately lead to an uneven playing field and a bigger war for talent – and an additional challenge to face for larger organisations who have to implement the legislation. 

Businesses will have to change the way they think about bringing talent on board 
In light of the legislation, businesses will need to refocus on auditing the purpose of engaging talent. Why are they looking to bring skills in? Then they can decide what the best method of doing that is. Is it an employed consultant? Is it a contract or temporary worker? Is it actually a statement of work project? Once the purpose is understood, the right action can be taken.

IR35 will change the face of flexible workforces
There’s no getting away from it. With IR35, there is risk of talent leaving the workforce. Unless businesses assess their strategy, individual contractors who currently provide services may end up feeling that they are no longer getting the return they want. We may see contracted services become more expensive as a result, or organisations will see a marked decline in the skills they can attract. The issues can be navigated, but alternative routes will have to be found to engage and attract flexible talent, especially at the higher niche end of the market. 

The private sector has been too relaxed about IR35
Organisations figure they have until 2020 to start preparing and, as it’s already been applied to the public sector, there will be plenty of learnings readily available. The reality is - as with all new legislation – it’s not black and white and it’s certainly not a ‘one size fits all’. Each organisation is going to be unique and needs to take the right decision for them as to the approach they take. To be fully prepared and compliant, they need to be making recruitment decisions with the legislation in mind today, not in six months or a year.

No one has more experience than Capita at implementing employment legislation at scale 
Every year for at least the last decade, there has been a major piece of legislation to implement. And every time we’ve led from the front. Take auto enrolment for pensions (PAE) or Agency Worker Regulations; Capita as an organisation has over 70,000 people on our books. We were one of the first in the country to implement the PAE as it was phased in over a three-year period. We implemented IR35 for at least 7,000 people in the public sector. We are without a doubt best placed to advise businesses on strategy and implement this legislation.