Research from Kingsbridge has found a lack of understanding around off-payroll working rules could severely impact access to talent in the coming months. Data from the business has suggests that 60 per cent of contractors will soon be seeking roles outside of IR35 legislation.
The news comes at a time when HR leaders across the UK are contending with severe skills shortages, with official figures showing the number of open vacancies across Britain now stands at a record high of 1.21 million.
Kingsbridge’s survey of 1,600 independent professionals found that although the majority of contractors (90 per cent) are currently on assignment, many will soon be looking for new opportunities. While nearly 80 per cent of contractors who have been determined to be ‘inside IR35’ are currently working via an umbrella, agency payroll or directly for the client, over half of this group plan to look for an ‘outside’ role in the coming months.
In addition, over 40 per cent of the group who have been determined ‘inside’ have increased their day rate by at least 10 per cent, further suggesting that forcing genuine contractors to work on a payroll could be an expensive move with little reward.
“Many businesses continue to enforce PSC contractor bans, with the vast majority pushing contractors on to the payroll or via an umbrella company,” commented Andy Robinson, commercial director at Kingsbridge. “This is a result of pressure felt by businesses and nervousness around abiding by the rules. However, this is a short-sighted and potentially self-defeating strategy which risks warding off the best talent. Not only has this approach resulted in businesses becoming far less agile but it has also been reported that the reforms likely contributed to economic disturbances such as the HGV crisis.
“One thing that the coronavirus pandemic has taught us is that the flexible workforce is extremely important,” he continued. “Never before has it been so evident that the ability to increase and decrease a workforce is essential for business success. However, as every HR leader knows, finding and engaging with a contingent workforce is challenging. For businesses struggling to find talent, one of the best pieces of advice would be to look at improving your IR35 processes.
Robinson believes contractors operate through a PSC because they genuinely intend to be engaged as a business. Failure to accept this, he says, will be disadvantageous for any end-hirer seeking to engage the best talent out there. “Simply put – blanket ‘No PSC’ policies or lack of IR35 process will only hinder access to talent and will no doubt result in significant project delays or cancellations,” he concluded.
