Meeting the Challenge
Paul Thompson, sales and marketing director, Ikiru People on Covid, compliance and technology demands.
2020 was an exceptional year for the recruitment and staffing sector, with the unprecedented obstacle of the Covid-19 pandemic forcing rapid decision making from agencies across all sectors. Corporate leaders struggled to adapt to continually changing business environments, with frequent adjustments needed to internal operations, service offerings and team structures against a backdrop of ongoing uncertainty.
To add to the already substantial challenge, a raft of new regulatory and compliance changes further complicates the picture as we begin 2021, shifting the legal and financial frameworks within which companies have to operate.
But, just as many companies were able to pivot successfully and find green shoots of growth during the coronavirus disruption, so the new compliance outlook for the year ahead creates opportunity for businesses who are pro-active in building value-add solutions for their clients.
IR35: What the future holds
After a delayed rollout owing to the pandemic, the government has repeatedly confirmed that there will be no further postponement to the introduction of IR35 tax reforms impacting the private contract labour markets. With increased scrutiny on so-called ‘disguised employees’, agencies will need to partner with employers to create and deliver compliant engagement models within the scope of new interpretations of what constitutes legitimate professional contracting.
The long-awaited private sector implementation of IR35 will have a variety of impacts. On one hand, many employers will be looking for their agency partners to guide them through the transition, acting as subject matter experts who can continue to provide compliant workforce solutions and add value to their clients by having the know-how, tools and processes in place to avoid a shock impact from the new regulations.
On the other hand, however, clients with a strong grounding in IR35 will be rigorous in their scrutiny of agency workflows and compliance awareness, appraising staffing partners on their ability to provide scalable offerings in line with the updated rulebook. Both of these scenarios put pressure on agencies to invest in the necessary contractual frameworks and consultant training to ensure that they can meet client expectations and confidently support both existing and prospective customers.
What is more, underlying this transition is an additional operations pitfall for businesses with digital systems that are not adaptable to new engagement models, and lack the ability to accurately track and report on IR35-compliant projects at front, middle and back office level.
Compliance post Brexit
With the UK’s departure from the European Union, the previous fluid employment arrangement across EU member states has been replaced by a new immigration system which substantially changes the way companies hire talent across UK-EU borders.
Although some exemptions are made for EEA or Swiss citizens who were already living in the UK before 31st December 2020, (who are able to apply to the EU Settlement Scheme for status adjustment), recruitment from outside the UK now involves sponsor licenses, each with subtleties and complexities depending on a range of hiring scenarios.
New sponsorship schemes range from a program supporting the recruitment of ‘Skilled Workers’ to Intra-Company Transfer dispensation, allowing executives and key employees to move within existing organisations. A broader ‘points-based’ system exists for a wealth of other application types, as well as a ‘Global Talent’ route for high-demand professionals with specialist skills.
Departure from the EU has also meant a change in data governance. Despite many companies erroneously celebrating the ‘end of GDPR’ as the UK formally exits the EU’s institutions, the EU GDPR was in fact incorporated into UK law at the end of the transition period, meaning sensitivity and security around collection, processing and storage of data remains a critical point for the recruitment sector within the UK.
Both domestic and international agencies (whether recruiting candidates across borders or not), as long as they hold information on both UK and EU nationals, should have a clear strategy ensuring they know where their data is being stored, where copies of it may exist, and how to leverage digital compliance solutions to prevent breaches.
Upskilling and reskilling
A critical component of post-Covid economic recovery will be the employment market’s ability to react to fast-changing skills needs, supporting workers in upskilling and reskilling to meet new employer requirements in a post-pandemic economy. The drivers for skills development do not stem purely from economic damage limitation, however, with several key factors indicating that a significant uptick could be on the way in the latter half of the year.
Both consumer and corporate patterns have, with varying degrees of permanency, been altered by the experience of lockdown. From a surge in digitised business services and e-commerce investment to a global rethink of flexible working structures and parameters, many of the inadvertent effects of pandemic response may be here to stay.
In parallel, uncertainty caused by an unstable outlook has resulted in the delay of vast sums of investment, both in terms of capital redeployment within businesses, and as regards institutional investment, private equity and venture capital. Similar trends have been observed in the consumer sector, with households lowering expenditure during lockdown in the absence of budgeted holidays, entertainment, travel and shopping.
The resulting ‘dry powder’ has the potential to stimulate a rapid economic bounce-back once vaccination programmes enable easing of restrictions and something resembling normal trading conditions are resumed.
Capitalising on this recovery for recruitment agencies will mean the ability to provide qualified employees into the right sectors at the right times, leveraging professional-grade training and skills testing platforms to deliver compliant staffing solutions.
Need for better technology
Despite many recruitment agencies’ best efforts to operate within this changing landscape, however, many key compliance issues relate to the day-to-day activity of recruitment teams.
Businesses which are built on technology stacks that are not seamlessly integrated with the way their teams work soon find their recruiters developing their own non-compliant working practices – from making local copies of data to communicating with clients and candidates through personal devices and messaging platforms.
This de-centralised way of working makes it exceptionally challenging for business owners to secure their data life-cycle and establish end-to-end compliance solutions, potentially undermining significant investments in reshaping their companies to succeed within the changing regulatory requirements of their markets. At the heart of many compliance issues are the day-to-day behaviours of recruiters themselves.
In contrast, those who leverage best-in-class technology solutions can hard code compliance into their daily working practices, minimising the need for employee workarounds and reducing the risk of breaches, violations and fines.
Success in the new look environment of 2021 requires agencies to invest in the training, delivery models and technology infrastructure to navigate a new compliance landscape confidently, taking advantage of the growth opportunities that change and a disrupted marketplace creates.