My phone rang early on a Monday morning. It was the contingent workforce program manager of a large multinational company. Let’s call him Peter. I could tell he was upset.
“I never understood the risk involved in misclassifying contractors,” he said gloomily. “We have so much work to do before April 2020.”
He had just come from a meeting with his CFO and head of legal to discuss the implications of the IR35 changes for their business. His head was spinning. He had suddenly realized the far-reaching implications of the new rules and how much the company would need to change to prepare for April 2020.
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He explained that the contractor workforce had been a key factor in the success of the business, and to ensure future growth it would be vital to retain their services and loyalty. “It is only dawning on us now that we have no choice but to prepare for the rule change in a pro-active way,” he said, “but how do we do that?”
He is not the only one asking this question. I have been asked the same question by many times in the past year. The answer is simple: get the right help to understand the requirements of the law, find out about best practice in implementing the rules, and then carefully design customized internal processes to manage the new risk.
Most progressive companies are taking these changes seriously and seeking advice on how to ensure they have the best approach in place to ensure positive contractor engagement with their valued contractor workforce.
Some companies are fearful of the changes — so fearful that they have vowed to discontinue using personal service company contractors after April 2020. This is understandable but unrealistic. Without these contractors, they will struggle to access the valuable talent and skillsets required for the development of their business.
There has been a lot of noise and concern about IR35 in both online and print media in recent months. I’m not pretending that introducing proper classification systems to private companies (and the change management required) is going to be painless. It will take effort and it will be time-consuming. But getting it right will put your company in the best position to attract and retain the best talent and the most sought-after contractors – the people who can make your company stand out from the crowd.
I urge companies to remain calm. Learn what constitutes best practice in this area and move forward in a positive way: set up the right processes so you can continue to profit from the input of your valuable contractor workforce after April 2020.
