IR35 is finally here. ETZ looks how your business can set up temporary and fixed term contracts to factor-in new guidelines.
After much discussion and a year’s delay, D-day – or I-day, we should say – is finally here. From 6th April 2021, the IR35 update to HMRC regulations comes into force.
If your recruitment agency provides temporary or fixed-term contractors, your clients may be concerned about how to avoid falling foul of the new legislation. To offer them peace of mind, here are some things to think about when you’re putting together employment contracts…
What’s the scope of work?
One way to ensure your temps and fixed term contractors operate outside of IR35 guidelines is to set a clear, defined project remit.
If clients start to ask for ad hoc tasks outside this agreement, stand firm; scope creep is a sign that freelancers are acting more like permanent employees.
How’s the project structured?
Genuine contract workers will be given deadlines, milestones and essential documents, but how and when they actually do their work should be left to the individual.
As soon as employers require freelancers to set aside core hours for their business, or insist they follow a specific working process, they’re in danger of falling under IR35 regulations.
Who can do the job – and who else are they working for?
To avoid IR35 legislation, employment contracts should ideally be with a company rather than an individual – through your agency than with the freelancer directly, for example. This way, the contractor is providing a service, and if they fall sick or cannot work, they can be replaced with another person that has the same skillset.
It’s also important that there are no exclusivity clauses in place. Your temp or fixed term contract worker may be fully dedicated to a particular client project, but they need to retain the freedom to work concurrently with other companies if they have the time.
Are there any perks?
One big distinction between genuine freelancers (operating outside of IR35) and contractors acting like permanent employees (therefore inside IR35) is the package being offered by their employer.
A genuine freelancer won’t be given any perks beyond payment. This means no paid holiday or sick leave. No financial support towards training and equipment. No business cards. No appraisals.
For ease, your temporary or fixed term contractor may be given access to internal files and a company email address, but that’s as far as they should be integrated into your client’s brand. Additionally, it’s common courtesy to inform clients when contractors are taking time off – but they don’t need to ask for permission.
Taking care of your clients’ contracts
After a difficult year, IR35 feels like yet another complexity to navigate for many businesses. But it presents your recruitment business with a great opportunity to add value.
Take the burden off your clients’ shoulders by managing the infrastructure around hiring freelancers – from setting up contracts to processing timesheets. This will give companies the flexibility to bring freelance staff on board, without having to worry about coordinating their paperwork and payroll.
ETZ helps recruiters reduce agency costs by up to 85% by integrating back office, timesheet, contract and payroll software. For more information visit the ETZ website.
PLEASE NOTE: The opinions expressed in this blog post are those of the authors and are provided for general information purposes only. This blog post does not constitute legal advice.
