All About Recruiting Contractors In The Year 2020

All About Recruiting Contractors In The Year 2020

Every year brings with it novelties and changes that rock or at least shake the professional market and industry. This year is no different. 2020 has started on a bang, and four months into the year, people already wish for it to be over for a plethora of reasons. For recruiters especially, 2020 might prove to be challenging, particularly those that work with contractors and freelancers.

The Taylor Review is set to enact a number of recommendations in the new taxation year. So, recruitment professionals need to take some time out to understand them. This new taxation year is bound to bring with it some crucial changes in the legislation as well as potential disruption, all of which must be understood so that necessary steps can be taken to ensure compliance at all times.

The headlines in 2019 were dominated by IR35, as renowned TV presenters such as Lorraine Kelly won massively against HMRC. In addition to that, several major companies declared their intention of not working with contractors via limited companies due to the implementation of the off-payroll reforms which have been fortunately delayed till April-2021 . The agenda of recruiters is still likely to hold changes to the rules of off-payroll working high, particularly because the roll-out in the private sector is expected in only one year.

Simply put, recruiters must be aware of all their responsibilities regarding IR35. This also includes the support that they need to give to clients. This becomes even more critical because of the enforcement after April 2021 because HMRC will become even more vigilant and will rely on recruitment agencies to make sure that everyone is meeting their obligations. That said, it is not only the changes in IR35 that recruiters must keep in mind. There are three more crucial legislations that are expected to come into force starting April this year.

Key Information Document

Although it has not received as much coverage as IR35, it is pertinent to note here that recruiters will also need to produce a document of key information for all the contractors that they work with. This document must include the costs, pay, deductions, benefits as well as fee. Businesses must also engage with their contractors and clearly establish all the terms of engagement prior to providing them with the services. In short, this document will offer valuable transparency and clarity to contractors so that they can efficiently help recruiters make sure that the playing field is a bit more levelled.

Abolition of Swedish Derogation

Agency Worker Regulations 2010 established Swedish Derogation that allowed agencies to design an exemption for contractors to equal pay. In case an agency provides a worker with a permanent employment contract, it can pay the said worker between jobs, complying with all the other conditions. In addition to that, the temporary agency worker does not need to earn the same old standard salary or enjoy similar working conditions as the agency’s permanent staff.

Swedish Derogation, as a part of the mistreatment of workers that are paid low, is expected to be abolished this year on 6th April. This abolition could potentially have financial effects for clients who employ temporary workers. In the same vein, agencies will also need to inform their workers about the Swedish Derogation provision not being applicable anymore. In addition to that, the eventual fall out resulting from the changes made to IR35, leading to more and more contractors being discovered to be employees in disguise could further increase the list of problems for recruiters who have relied on concessions historically.

Employment Agencies Standard Inspectorate

The Taylor Review suggested the extension of the remit when it comes to the Employment Agencies Standard Inspectorate in order to cover the proper regulation of all umbrella companies. Currently, the unregulated market is mostly booming with IR35 changes. That said, unscrupulous companies are now in the spotlight due to their tax relief scheme promises like the Loan Charge. Hence, it is quite possible that this recommendation/suggestion will be carried forward to the next taxation year as well.

Therefore, recruiters should conduct their due diligence when it comes to all the umbrella firms that they choose to collaborate or partner with. In the same vein, they must seek accreditation by reputable entities such as the Contractor Services Association (CSA) or The Freelancer. With continued engagement and the right preparation with key stakeholders, it is totally plausible for recruiters to ensure compliance with all these key changes in the regulations that are coming into effect this year.

How Can We Help You?

With the constant change in legislation and norms with every passing year, it is more important than ever for recruitment agencies and companies to stay on top of their games when it comes to complying with them. Therefore, in case you have any further query or need help, get in touch with us.