The big skill gap – the future impact of IR35

The big skill gap – the future impact of IR35

With April 2017 fast approaching, the race is on to understand what impact IR35 will have. The world of the disguised employee (someone who works within a business as though they are a permanent employee, but they do not pay the necessary corresponding National Insurance Contribution and Income Tax that a permanent employee would) is a hot topic. Are you one of them or does your organisation relay upon them?

Much conversation is around the devolving responsibilities between employers, umbrella companies and agencies. All are passing the responsibility baton around as though it is a hot potato. The UK (United Kingdom) government are clear on what is applicable to IR35

Why do our Public Services have consultants in the first place? Often it is due to the inability of increasing head counts and a way to circumvent this is a consultant. The increase in short-term contracts coupled with the reluctance, of potential employees, in taking them.

We should not forget that consultants are often engaged to expedite the design of solutions and projects. This is something that many organisations could not do in the short term. Consultants have an excellent pedigree of educational standards such as MBAs and often-strong industry experience. The projects they undertake are a platform that puts theory into practice over multiple organisations. With each project, the depth of skills gets stronger.  These are just a few tips of the iceberg of what value a consultant can add to an organisation.

With many employers and consultants not fully aware of how IR35 affects them, take your mind to what the actual resource holds apart from the direct financial impacts. Specialised skill sets for change management, projects, design of software packages including implementation just a few of specific skills in demand.

The pressure on our already pushed Public Services will become more apparent. Heavy investment in state run infrastructure is required.  How will this legislation create interest to keep skill sets and projects running to meet demographic changes and demand?

Will we see a mutiny on a mass scale come April and May 2017 of these valuable skills and knowledge? What will happen if 70% of the consultants leave the public sector and 30% are happy to stay?  Larger organisations not in the public sector are likely to see an increase in applicants for consultant positions as the market shifts.

State run organisations could combat this skills shortage and plug the gap by upskilling current employees perhaps though apprenticeships (Higher or Advanced) which may be a longer-term solution. The benefits of the government’s new Apprenticeship Levy are an abundantly clear strategic possibility.

In the short term, these state run organisations could outsource certain contracts to consultants from larger organisations providing they can demonstrate the projects are not regular employee positions (i.e. disguised employee).

Workforce development –

The Water Industry in England is not a public entity following the privatisation in 1989 however in Scotland it is still a public entity within government control. At times, the Water Industry in England still behaves like a public entity – and monopolistic tendencies allow it to be quite dismissive of competitive threat about to hit them with Open Water

The message is loud and clear if in doubt check and seek advice IR35 Helpline.

For organisations, requiring Training Needs Analysis (TNA), upskilling, Esat-Smyth Consulting can offer this service and design bespoke training packages. We are able to deliver this in-house in smaller cohorts or within larger groups using blended delivery and a balance of accredited qualifications. Your organisation, your values, linked into a package, which your experts and ours co-create.

Still confused here is a quick summary:

  • Contact IR35 Helpline if in doubt
  • Define if you’re a disguised employee or not
  • Don’t bury your head in the sand if your agency and client neither want to commit to the decision

Be prepared for  April 2017

Author Deborah Hood

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