IR35 – Why Employers Need to Hope for the Best, But Prepare for the Worst
Mar 3, 2020
IR35 – Why Employers Need to Hope for the Best, But Prepare for the Worst
Mar 3, 2020

With the IR35 tax changes coming into play in 2020, the status of ‘self-employment’ may begin to seriously lose its appeal.  Contractors around the country will be starting to consider moving over to the dark side of permanent employment, boxing up their idealistic counterculture, badging it a distant memory of a ‘young man’s game’.  

So, as an employer, at last (it would seem) all our dreams have come true.  There’s an influx of new talent seeking permanent employment pouring into the marketplace and the war for talent can finally become a thing of the past. 

But beware…

The truth is there are necessary and overdue changes coming to the temporary contractor marketplace, if it were property, they’d call it market correction.  But the reality is that in spite of IR35 contractors will always be paid a premium over and above their permanent counterparts. They simply had it even better because they were paying a more preferential tax rate which thanks to IR35 will no longer be the case. 

So, here’s the thing.  If you’re interviewing a contractor for a permanent role, keep in mind the old saying, once a c**t*****r always a c**t*****r.   There’s a real risk they’re reverting to ‘temporary’ type, ‘temporarily’ abandoning the apparently sinking ship to join the good ship permanent employment to weather the storm.  

Self-employment is so much more than an effective and (soon to be illegal) way to pay less tax.  It is in part a lifestyle choice. Freedom, flexibility, more control over your work-life balance.  At worst, possibly driven by them being unable to work for or with other people. But the multi-faceted advantages are something you need to consider.

Don’t get me wrong, if you do find yourself interviewing a contractor for a permanent role in your business you must give them real consideration.  They bring a really unique breadth of experience, quite possibly amongst your competitors. They’ve also got the ability to problem-solve, work independently and think creatively.  You just need to take additional measures to ensure they’re really serious about going permanent. 

Prepare yourself by making the following checks at interview stage and if you hire them, post their employment:

At interview stage:

  • Find out whether or not they have had contracts extended and whether there are many instances of them not completing a contract.  Seek the reasons why and if possible, contact their previous employer for more information
  • Be direct, ask them why they’re now considering the move from temp to perm
  • Set your boundaries from the outset.  Have the conversation about your expectations regarding flexibility, discuss your policies and procedures with them in detail and gauge their reaction
  • Ask them about their expectations, it may be that they are looking for a more flexible role than the one you’re offering, but if they’re the right person for the job it may be worth finding a compromise
  • Develop a specific set of competency questions around their ability to work in a team environment and their ability to take direct orders from senior colleagues
  • As a contractor they may have become involved in providing support to other companies.  This may not be an issue, but better they lay their cards on the table honestly at the outset.

Post-employment:

  • A perk of contracting is the flexibility to enjoy more holidays and long weekends.  Ensure you keep an eye on their attendance
  • Timekeeping can become an issue if not managed correctly, they’re used to coming and going as they please, so be sure to check they’re adhering to the contractual agreements you made at the outset
  • For the first 6 months, stay in semi-regular contact with their line manager and keep an eye on how they’re working with the team.

Having said all that, the war for talent isn’t just about hiring great permanent employees.  There are still huge advantages to the temporary workforce and very good reasons for people to remain self-employed.  Contractors can be significantly more cost effective; you can call on them as and when there’s a business need and you don’t have the additional duty of care when it comes to personal issues or benefits packages.

The bottom line is the right balance of temporary and permanent staff will be unique to each organisation.  Langley James has over 20 years experience in exceptional IT Recruitment. We’re connected with some of the best talent and employers in the sector.  If you need help with your resourcing strategy, or you have a business need for either temp or perm IT talent get in touch.

Find out more about our services here

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