Panic and confusion defined the run up to IR35 in the public sector. And to a certain extent, such concern was justified, should IR35 updates not be managed compliantly. Without accurate IR35 assessments, there’s every chance independent workers will down tools and leave the public sector in their masses.
From the first mention of IR35 reform we have stressed the need for public sector engagers to prioritise the quality of assessments over the sheer speed and quantity. This approach will ensure accuracy, and pave the way for the continued and compliant use of contractors in the sector.
With the right approach however, there is no doubt that reform can be managed, particularly in the IT and Tech sectors which is where the majority of our work is done.
Our own data has revealed that prior to April, the month of reform, 90% of the rigorous, detailed public sector IR35 contract and working practice assessments Qdos Contractor carried out, ‘passed’, and in our expert opinion belong outside the clutches of IR35.
Since April, and after the long-awaited changes, 89% of our public sector IR35 contract reviews have ‘passed’, suggesting that reform has had a marginal effect on the outcome of the IR35 assessments Qdos Contractor undertakes. Furthermore, it suggests that working on public sector projects outside of IR35 is indeed possible, should the working arrangement be reviewed properly.
The challenge lies in ensuring that public sector engagers are taking the right measures when it comes to assessing the employment status of their independent workforce. Public sector clients and agencies lack of experience when making well-informed decisions. This has without question led to a number of blanket IR35 determinations – a move taken by end-engagers to protect themselves from any liability. However, this simply pushed contractors away and contributed to growing unrest, not to mention a feeling among independent workers that the sector is no longer suited to them.
From The NHS and its growing locum and contract workforce, through to TfL, The MoD and – ironically – various Government departments, the public sector relies heavily on contractors. Given the responsibility now lies with the organisation to determine employment status, it’s essential that well-informed and careful IR35 decisions are made.
Prior to reform, 85% of contractors revealed they would leave the public sector should they be placed inside IR35 by their client or agency, hugely impacting the sector itself, not to mention resulting in a dramatic increase in competition for private sector contracts.
Understandably, contractors remain wary about the public sector changes, reflected in the 85% who simply do not trust HMRC’s ESS Tool to make accurate IR35 determinations. That many public sector engagers continue to place their faith in the tool widely criticised for its inaccuracies and questionable logic, obviously remains a concern.
However, given that the vast majority of public sector contractors assessed since April are – in our expert opinion – working outside IR35, suggests that regardless of recent reform, contracting is in no way doomed. What matters now, is that the public sector bodies and agencies – as the parties setting IR35 status – take note, and ensure they are making well-informed decisions.
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