IR35 Reform On Hold – But Is It Enough?

On Tuesday 17th March the government announced it was delaying IR35 private sector reform for a period of 12 months in response to the current UK crisis that is COVID-19. But is it enough?

 

We are living through an unprecedented crisis. The Government has two key focus areas right now: 1) Keep the NHS afloat to save lives, 2) Keep the economy alive. Both mammoth tasks.

And as of yesterday (17th March 2020) they have decided to delay the controversial reform to IR35 in the private sector. Intended to give already struggling businesses a break and to give contractors a little more security while our economy struggles to balance the load.

This comes hot on the heels of the The House of Lords Finance Bill Sub-Committee inquiry into the implementation of IR35 in the private sector which is demonstrating the low levels of confidence on both sides, engaging companies and contractors/freelancers. 

Mr Barclay, MP for North East Cambridgeshire and chief secretary to the Treasury stressed this is a delay and not a cancellation, “I can also this evening announce the government is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to April 6, 2021. 

“This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals.

“This is a deferral not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay the same tax as those employed directly.” 

 

Business & Contractor Response

So how do businesses feel about it – understandably mixed. They didn’t want this change in the first place, they’ve spent money on preparing for it and most likely have lost talent along the way if they deemed a particular role to be inside IR35 within the unclear guidelines. That aside, this measure could help some businesses keep going in uncertain times – once again proving the efficacy of this particular breed of workforce.

And how do the contractors feel – frustrated, and rightly so. They have had significant disruption to their working lives, may have had to change locations, may have taken full time employment and may have turned down dream jobs which they can’t get back now. However the silver lining is that they may be able to continue working in a more fair manner for the next 12 months. Of course there is still significant uncertainty for them in regards to the future economic climate – all the more reason for them to be paid outside IR35 for now.

 

The 12 Month Delay

The industry has been calling for a reversal to IR35 reform since it was announced back in 2017. The new legislation is unfair to the majority of contractors who make up a vital part of the UK’s flexible talented workforce. So the 12 month delay is welcome, but not enough.

Firstly we must consider the times we’re living in now, our world is likely radically changed by a microscopic virus. This change is not going to be a cut-and-dry 12 week postponement to normal life. 

The mathematicians and medically trained amongst you may have realised that China is largely still locked down because the contagion demands a lengthy period to manage. Conservative estimates put UK ‘normalcy’ somewhere in the mid-2021 timeframe, and this is partially dependent upon an effective vaccine, partially dependent upon the public behaving responsibly. 

And the change will have a ripple effect. The way we operate daily life may well be significantly changed by this, and the economy will take longer to recover than in a typical financial crisis. 

So this flexible workforce is going to be essential. And not supporting it will not be an option. So we hope this delay will become a permanent change – after all IR35 reform was always a money-grabbing exercise by HMRC, it’s hard to see where working conditions and fairness came into it for the vast majority of contractors.

But again, this is not enough – onto the most important part…

 

IR35 Reform In The Public Sector

Medical and nursing students are being sent to the front line before their time in the war against this virus. This is happening to try and free up more experienced clinicians to manage COVID-19 cases while the less experienced work on the other less critical wards, trying to keep everyone as safe as possible.

In addition to this, retired NHS – yes even those over 70 or with underlying health issues – are being asked to go against the self-isolation advice and return to the NHS at this time. And will they be compensated fairly, probably not…

You see it’s been a problem for the last few years, that retired highly skilled NHS staff who had been filling in as locums as, when and where necessary to help our ever struggling NHS. And for this – pre IR35 reform – they were paid well enough to compensate them for gruelling hours, extensive travel, time away from family and friends, and to cover accommodation expenses wherever they were needed.

Since IR35 public sector reform, when all medical staff were blanket labelled as ‘inside IR35’, this has changed. The doctors, nurses, pharmacists and surgeons were no longer being correctly compensated – in fact in some cases they were actually out of pocket for their altruistic efforts. So of course they stopped offering their services.

Now they’re being called back into action. And yes most will gladly go because this is not your everyday situation. They got into this profession because they care and they’ll likely be out of pocket to help the public and their colleagues through this time. But is it fair – no.

If IR35 reform is suspended in the private sector with the aim of keeping the economy afloat, why is it not being at the very least suspended in the public sector to help medical staff return and keep the NHS afloat?

 

And A Final Note

We’ve talked a lot about fair pay for fair work in this blog. And we do feel it’s only right to stress that very few of our 1.5 million strong workforce in the NHS, and those supporting the NHS, are compensated adequately for their work. 

If in the future any positives can be drawn out of this terrible crisis they should undoubtedly include a change to the way we compensate our NHS employees. These are people who risk their lives every day for us, who are forced to make the hard decisions, and who rarely receive enough thanks for it. 

To all in the NHS and supporting the NHS at this time: thank you.