What could IR35 mean for flexible working?

The extension of IR35 tax legislation to the private sector in April could mean big changes for contractors, many of whom chose contracting for a greater work life balance. Will they move in-house and what implications could that have for flexible working?

employee using calculator

The franchise agreement contract covering parties, the grant, territory and term

There’s been a lot in the news about IR35, the off-payroll tax legislation that is being rolled out to the private sector from April. Contractors are really worried that companies, who will now have to determine a contractor’s employment status, will just take a blanket decision not to use them due to the complexity over who is self employed and who is a disguised employee. Contractor experts are expecting many limited companies to close down as a result and are giving out advice on how they should do that.

It’s clearly a very stressful time, but what could the impact be on employers? They will surely have to bring many contracted-out services in-house. Will they have to pay a premium to welcome contractors, often with skills that are in big demand, back in? Are they likely to do this at a time of such economic uncertainty with Brexit?

Work life balance

Another factor which is more of interest to me is the reasons people chose to go self employed in the first place. Surveys show that work life balance is a key issue for many who are self employed. They will surely want to maintain as much of that balance and control over how they work – and where – as is possible. Will the result of the IR35 legislation then be to push employers to flex more and to blur the lines further between self employment and employment in terms of how people work?

I spoke to two employees of the Food Standards Agency this week. It has introduced more flexible contracts for its workers, embedding flexibility as standard. The impact that makes personally is huge. Both of the people I spoke to said they would probably have had to reduce their hours or look for a more local job if they hadn’t had the more flexible contract.

I’ve also read a lot of books which make the case for why employers need people with more entrepreneurial skills – people who are self motivated, come up with innovative ideas and are able to manage their own work. It makes perfect sense therefore to employ people who have experience of self employment. The question is what they will do to provide the conditions to attract and retain them.



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