The extension of off-payroll working/IR35 reforms to the private sector has been postponed for a year, and will now take effect from 6 April 2021. Chief Secretary to the Treasury, Steve Barclay, announced on 17 March 2020 that this was due to the ongoing spread of COVID-19, as a measure to help individuals and businesses.
All private sector medium and large businesses that contract with personal services companies had been impacted by the proposals and many have already rolled out significant changes impacting their contractor workforce. Some have already invested considerable time in planning and updating processes and documentation. This drive can now pause, which will give some respite among the business continuity changes currently being rolled out nationwide.
Among the COVID-19 adjustments, we recommend ensuring that there remains clear accountability for getting in order arrangements for contractors, so that activity can recommence at the end of 2020/start of 2021. Only time will tell whether the draft regulations in the current form become law, or if there will be changes. Whilst shelving the reforms altogether seems unlikely, particularly in view of the potential increase in revenue for the government, nothing is certain in employment law just now.
Many businesses have gained insights into their broader workforce and there is now time to devise a steady method to approach workforce planning, post COVID-19, and in good time before the proposed April 2021 changes. There is time to get contracts in order, test whether contracting remains the suitable model for certain roles, and ultimately apply best practice governance around onboarding of contractors from April 2021, regardless of the final position on IR35. There may also be some recovery work to be carried out, such as where contractors are due to exit the business in the next fortnight or where a detailed future strategy has already been rolled out.
For further advice or if you have any questions about how this will impact you, please get in touch with your usual Dentons contact or Virginia Allen, the head of our People, Reward and Mobility practice.