IR35 Webinar: How to attract the best talent post-April
On the 24th of March, we held a webinar for recruiters and end-clients. With the introduction of IR35 reforms just days away (and now being in place), we wanted to see how recruiters and end-clients were preparing and what steps they were taking to make sure they could still attract top contracting talent under the new off-payroll working rules. In our recent webinar, we spoke to Charlie Cox, commercial director of SThree, to get a recruiter's perspective on the upcoming reforms, the readiness of the contractor supply chain, and the opportunities that IR35 presents for staffing businesses working with contractors.
Charlie has been with global recruitment giant SThree for over 15 years, and was heavily involved in the implementation of the IR35 rules for public sector recruitment at the firm. He’s now leading the private sector side of things. On the call, he was joined by Andy Robinson, Kingsbridge’s Business Development Director, who works to support recruiters, accountants and end clients with what he calls “the IR35 headache”. The webinar was hosted by Kingsbridge’s IR35 Project Manager, Ryan Dawson. If you missed it, you can catch up with a recording here, or read on for our summary of what we learnt.
Implementing IR35 in public sector recruitment
Charlie gave us some background on how SThree had worked with contractors and end clients back in 2017 when the IR35 reforms hit the public sector. Their strategy was to put themselves in front of as many clients and contractors as possible to have those conversations about IR35 status. SThree saw this as an opportunity last time - and have taken it that way this time as well - getting face-to-face with customers and sharing their knowledge. If you know your stuff on IR35, this is your time to shine.
SThree have also updated their IR35 training, creating a suite of products on their Learning Management System (LMS) so that recruitment consultants can look up the answers to specific IR35 questions. However, the most major change in approach has been in their choice of status tool. Last time, Charlie explains, they were using HMRC’s CEST tool as the main go-to tool for all their contractors and customers. Due to poor feedback on the tool’s performance, this time they have looked at the market, reviewed all the third-party IR35 tools and then chosen one to implement into the SThree business for all their brands and customers to use. They chose the Kingsbridge Status Tool, which Charlie says is now “embedded in the SThree business and working incredibly well with our customers”.
Finding the right status tool for the client
Although Charlie reports that the Kingsbridge tool has been well-received amongst clients, they do still find the occasional customer who wants to stick with CEST. The CEST tool’s propensity to throw up indeterminate results (1 in 5 attempts will fail to produce a determination) can be frustrating but does present recruiters with the opportunity to suggest alternatives and support clients through the process. Andy highlights that 10-15% of cases put through the Kingsbridge Status Tool come back as borderline. This is where the team of IR35 experts will step in, asking more questions, delving deeper into the reasoning behind the answers, in order to produce a firm determination - something that you definitely don’t get with CEST.
A lot of emphasis has been placed on preparing for the April deadline. But recruiters, contractors and end clients need to remember that IR35 is here to stay - it needs to be integrated into daily working and become a part of “business as usual” for anyone engaging contractors. Many end clients are currently using several tools, or expensive consultancy services, to prepare for the introduction of IR35, which might be useful for this initial period where you need lots of contracts assessed in a short space of time, but will be unsustainable in the long term. SThree has recognised the value of compliance to organisations and focused on upskilling its staff to the level where they can have a consultative conversation on IR35, to give both end client and contractor customers confidence in their understanding and ability, passing the knowledge on through the entire supply chain.
Are contractors being assessed fairly?
Charlie feels that the emphasis being placed this time on “reasonable care” means that more contractors are being assessed fairly. His focus is on trying to work with both clients and contractors to provide the right level of knowledge and guidance so that they can make an informed decision. Some customers are still set on blanket determinations or banning the use of PSCs entirely, but he warns that “if you do that, you’re going to reduce the talent pool, and increase costs at the same time”. He feels that customers may change their minds when they start to see the impact of their decisions, which may not be for 3-6 months.
Concerns and challenges
The panel also reflected on what the biggest concerns and challenges were at the moment. Charlie felt that the biggest issue on the ground is that “the wrong people within an organisation are making the determination”. HR directors, tax directors or finance directors are usually “too far removed from the delivery of services,” Charlie warns. At such a distance, they cannot sensibly or realistically answer the questions on status. Sometimes this leads to decisions being made upon assumptions rather than reality and that is “a very, very dangerous situation for a customer to be in”. He advises that the closest party to the contractor should be making determinations. Andy demonstrated that this is one of the areas that the Kingsbridge Status Tool can help with. With the functionality to add sign-off responsibility, the hiring manager can answer all the questions about a role, then this can be sent to a legal director or HR director for sign off. This will help facilitate an audit trail, institutional compliance, and stimulate discussions around things like working practices. Kingsbridge can also offer optional insurance for outcomes that are outside IR35, to provide protection in the event that the determination is challenged by HMRC in the future. This can help protect recruitment businesses where they are the fee-payer, and also provide extra reassurance to anxious end clients.
Make IR35 work for you
Andy reflects on how impressed he has been this year by recruitment businesses seizing this as an opportunity to add value for clients. By educating themselves, looking at the market for solutions, and proactively taking the issue to clients, some recruiters have been giving themselves a huge competitive advantage. Charlie agrees that the legislation provides a huge opportunity for recruitment agencies to make themselves stand out: “never have I seen in my experience in the staffing business a more pivotal point where an agency can provide as much value as we can now around a piece of legislation,” he says. This is a unique opportunity for recruiters to go out, get closer to customers and develop good working partnerships based on education, communication and sharing expertise.
The Kingsbridge Status Tool
The Kingsbridge Status Tool has been a key part of how SThree have upskilled their consultants and organised their IR35 compliance. They’ve used the tool and the IR35 knowledge they have gained from it as a way to open up conversations with consultants and end clients alike around the sometimes thorny issue of IR35. For us, it’s great to see a partner embracing IR35 so positively and taking advantage of the opportunities it presents. If you’re still searching for the right IR35 solution for your agency, you can get a free, no-obligation demo of the Kingsbridge Status Tool - just fill in the quick form on our website and we’ll be in touch.