Ahead of the implementation of the IR35 changes in April 2021, end-hirers should be in the process of undertaking assessments of their contracting workforce and working towards producing Status Determination Statements (“SDS”). Whilst different organisations will approach the assessment process differently, it is clear that effective communication with workers is of significant value. Many contractors will understandably be apprehensive of the forthcoming changes and what they might mean for them; by keeping contractors updated and involved in the process from start to finish, this can alleviate concerns and assist in maintaining positive working relationships. There may also be occasions where the worker’s input is required to provide clarity on their working practices, which ensures that a full and accurate picture of the engagement is obtained prior to producing the SDS.
BENEFITS OF ENGAGING AND COLLABORATING WITH CONTRACT WORKERS
Under the new IR35 rules, end-hirers are also obliged to have a challenge process in place to allow contractors to challenge the SDS they have been issued with if they disagree with it. Clearly, organisations will want to minimise the number of challenges they receive in order to reduce the time and costs spent on this. Ahead of the initial April 2020 implementation date we also saw unhappy contractors lodge employment tribunal claims, for employment rights and benefits, after being categorised as Inside IR35. The most effective way to minimise the number of challenges and claims raised is to ensure effective engagement and communication with the contractors. By being transparent about the information and processes used in reaching the determination, as well as welcoming any additional information the contractor believes should be considered, it is likely that the number of challenges raised will be minimised. Being transparent and engaging with contractors in this way should ensure that the contractors believe the SDS they have received is based on full and accurate information and is fair.
In addition, where contractors can see that their client has exercised reasonable care in producing their SDS, this also reduces the risk of contractors leaving and attempting to find a role elsewhere that has been categorised as Outside IR35. This is clearly of significant importance to end-hirers in ensuring a smooth transition into the new IR35 rules in April and in avoiding a potential mass exodus of contractors and the inevitable problems that would cause to their business.
Furthermore, by engaging with contractors at an early stage and then throughout the IR35 assessment process, this may open opportunities for other ways of working that could benefit both the contractors and the end-hirer. For example, if a contractor is to be categorised as Inside IR35, there could be a discussion about the possibility of becoming employed. Early engagement and communication with contractors therefore not only minimises the risk of future challenges and queries, enabling the issuing of SDSs to be dealt with smoothly and with minimal disruption but can also lead to better contractor retention levels and facilitate a smoother transition into alternative ways of working following the implementation of the new IR35 rules in April.
CONTACT BROOKSON LEGAL
If you need further support regarding your audit and maintaining your contractors SDS’s pre and post April 2021, then please don’t hesitate to contact Brookson Legal.