IR35: An Opportunity for HR?

It’s just over six months until changes to the IR35 rules are rolled out into the private sector. As expected, this has caused frenetic activity across multi-disciplinary teams as they try to get to grips with the changes. There are many things to consider, such as:

 

  • What proportion of the workforce could be in scope of IR35?
  • What processes will need to be rewired to ensure compliance with the new rules?
  • How will existing projects that rely on flexible resources be impacted?
  • What is the strategy going forward for using flexible resources?

 

Unsurprisingly, given the UK’s current talent shortage, plus the uncertainty surrounding Brexit, the CIPD’s latest Labour Market Outlook reports that over 40% of employers say it is more difficult to source talent now than it was 12 months ago. However, despite this, it is interesting to see some organisations looking to shut the door on using alternative flexible resources.

 

Alternative resources enable an organisation to put the right talent in the right place, when and where it’s most needed: when on-balance-sheet talent is becoming increasingly harder to find.

 

Looking back on the many meetings we’ve had with clients over the past couple of months on the practical application of the changes to the rules, I can’t help but think of the 2019 Deloitte report on Global Capital Trends, which ranked the alternative workforce as the least important trend for HR and business leaders in the UK.

 

In the report, 65% of respondents rated the alternative workforce between somewhat important and not important, and only 8% have an established process to manage and develop alternative workforce sources. This makes me wonder, how many still hold that view now?

 

Broadly speaking, alternative work covers contractors, independent consultants and freelancers and gig workers (the fastest-growing labour group in the past decade). It comes in many shapes and sizes, but for the insurance market, the alternative workforce consists of mainly contractors and independent consultants operating via PSCs. Across Avencia’s clients, the top 3 users of alternative resources are IT & Change (42%), Finance (25%) closely following by Actuarial Risk & Compliance (22%).

 

Perhaps the trend was not ranked as high on the HR agenda because flexible resources are still widely considered a responsibility of the business, not the HR and talent acquisition functions, particularly of small to medium sized businesses. Often, beyond the processing and on-boarding processes, HR prefers not to be involved.

 

Still, I can’t help but think that IR35 is a great opportunity for the HR function to demonstrate commercial drive – something as a profession it is keen to achieve as one of the core behaviours in the CIPDs Profession Map.

 

Is the HR function equipped? Granted, there is a gap in knowledge, development and resource: but this is where an embedded outsourcing partner such as Avencia can support and complement HR.

 

Sounds like something you’d be interested in? Give the team a call on +44 (0) 203 861 9360 or email us at hello@avenciaconsulting.com