r10 Consulting: IR35 – Understanding the Impact on People

By r10 Consulting

As well as a programme of compliance, IR35 has a significant impact on the people within your organisation. We are also getting an increasing number of enquiries from contractors who are getting caught up in the blanket approach of large organisations. They are making the decision to move elsewhere and are doing it now, recognising their value and expertise in a competitive market. This gives you new opportunities to benefit from this.

As r10 work with our clients across Advisory through to Staff Augmentation and Project Delivery to support them on IR35, managing the people impact is an integral part of our approach.

This article highlights the key areas of impact on your employees, existing contractors, and future contractors.

For insight into what your IR35 programme should cover, you can read more here.

The impact on employees

Internally, employees will have new responsibilities on how they engage and work with contractors. This will mean having different conversations, which might sometimes be more difficult than they were before and therefore requiring more support.

There will need to be greater transparency and individual managers taking the decision to bring in contractors outside of a formal process will need to stop. They will need to be engaged and understand why to avoid it being seen as potentially taking away their autonomy in managing their team.

Colleagues working alongside contractors will also find things changing. There may be an increased differential in ways of working. Contractors being found inside of IR35 may lead to salary differences, especially if you are taking decisions to convert consultants to permanent members of staff (and if you have a budget to do so).

Should contractors choose to leave, permanent employees may find there is increased demand on them to deliver, resulting in a potential negative impact on their own morale and wellbeing.

The impact on existing contractors

Many of the same impacts on employees, will also have an effect on contractors. This can be an emotional time as the way they have worked over many years comes under threat. Mortgages, families and other lifestyle commitments have been shaped by this. Therefore, they will be eager to know what it means for them individually and the consequences of the status determination decision. They will then make decisions that are right for them personally. If they are business-critical, this will have heightened importance, especially for ongoing projects they may be managing through this period.

As a business you will need to decide what the alternatives are should a contractor choose not to accept their status and leave to work elsewhere. We are seeing contractors making this move in anticipation of what they expect is going to happen, even if the eventual outcome and your intentions may differ.

The impact on future contractors

Each future assignment will need to ensure that contractors are engaged in a compliant way and on its own merits. What has gone before will not be sufficient for assessment.

It is likely that people are going to prefer to work on projects that are outside of IR35, minimising the individual impact on them. Having assignments that are clearly structured as outside IR35 and enabling contractors to continue to use their expertise to work in a flexible, autonomous way, could be a real opportunity to differentiate and attract new talent that may not have been open to you previously.

Click here to read more about r10’s insight on the 7 key areas for implementation.