It’s a question clients, contractors and agencies are pondering as the private-sector IR35 reforms edge ever closer: do in-scope decisions spell the end for contracting?
The short answer is no.
Clients need contractors – that’s not going to change come April 6th. But the market will be rocky for a good few months while the dust settles. It’s impossible to say for sure what the impact will be, but I see competition heating up as a result of fewer projects sitting outside IR35. We might also see the market thinning out, if contractors decide to go permanent.
Attracting workers with an in-scope assessment
Many of the big companies are going down the blanket inside route. This might be down to risk, or because they don’t have the time or resources to assess the many contractors on their books on an individual basis.
It’s likely some of these companies will scrap this blanket approach in future, instead assessing cases individually. But for the time being, what can organisations do to attract contractors with an in scope?
One thing they could do is promise to cover the cash shortfall for contractors. After all, a drop in their daily rate is a key concern among contractors – but I do feel that there will be some reluctance among clients to do this.
Or, blanket IR35 companies might be upfront with contractors if they plan to assess individual cases in future. This alone might be enough to inspire them to take a contract, especially if it’s with a big, reputable client.
The benefits of working inside
It’s worth pointing out that there are definitely benefits of working inside for contractors, and clients could do well relaying some of these to workers.
Contractors sitting inside can basically continue as they were before, without the added stress of deliverables or the financial risks or implications associated with working outside. For instance, having to complete projects in their own time, so out of their own pocket, in the event that they run over.
Yes, contractors will be taking home less money working inside. But it’s not all about the money; flexibility, freedom and the chance to work on some fantastic projects are all reasons why workers made the move to contracting. These benefits aren’t going to change.
Also, if there’s lots of competition for outside projects, which I predict there will be, contractors will need to consider whether they risk getting no pay as they try to find work, or if they’d rather have the reassurance and security of working inside, albeit with a slightly lighter pay packet.
My advice to contractors is not to make any knee-jerk decisions. Sit tight and ride out the bumps in the market that will inevitably come post-April 6th, then decide. And, maybe even look to advise companies on how they can work to an outside scope.
How Talent can help
Many clients who have made a blanket in-scope decision will want to get their contracts back to being outside, because they know that’s what most contractors want and it will help them get the best in market. They’re just not ready yet – but Talent can help.
We’ve got the tools, knowledge and market experience having gone through this process with our public-sector clients and contractors in 2017. Meaning, we’re well-positioned to consult on the market, talk through case studies and statistics, assess risk and impact on projects, and run through the six factors involved in determining a contractor’s status. All this, we hope, will give clients the confidence to provide outside contracts and benefit from top talent.
Yes, times are changing for the contract world, but that’s the way the market is going to be come April. The sooner we can all accept that, the better.