– The Financial Times<\/span><\/a><\/p><\/blockquote>\nWhat impact is this having?<\/b><\/h2>\nCandidates, rates and roles<\/b><\/h3>\n
What do you get when you have spiralling demand and tightened supply? You get inflation. The current imbalance in the market is fuelling the hyperinflation of wages, which is only exacerbating the backlog of open roles.<\/span><\/p>\nOver the past year, we\u2019ve seen some IT permanent roles go up by 20\/30% (in somes cases 40%) – and we\u2019re talking about the same job with the exact same spec. When you look at the figures, it\u2019s easy to see how this landscape benefits IT specialists. Candidates have their pick of jobs and can demand huge wages – and the wages they\u2019re being offered are increasing.<\/span><\/p>\nCompanies want to avoid recruiting for roles, or losing staff, so they\u2019re prepared to pay over the odds to retain their talent. The market rates are so inflated that they know they\u2019ll lose workers if they don\u2019t match – or exceed – what\u2019s out there. These counteroffers are incentivising employees to sit tight.<\/span><\/p>\nFor example, if you\u2019re a technical architect your salary has probably gone up by \u00a310k over the last six months just by staying put. Just a hint that you might leave is enough to trigger an immediate pay review. It’s the career equivalent of wanting to move home but knowing that for every month you stay, your property will increase in price.\u00a0<\/span><\/p>\n![\"\"](\"https:\/\/cdn-01.cms-eu-v2i.applyflow.com\/identifi-global\/wp-content\/uploads\/2023\/01\/Screen-Shot-2023-01-12-at-2.51.59-pm-300x134.png\")
<\/p>\n
The problems for companies<\/b><\/h3>\n
How can you grow your business without the right people in the right roles? You can\u2019t, it\u2019s that simple.\u00a0<\/span><\/p>\nIt\u2019s the equivalent of designing a beautiful building and having no one to build it. You may have grand plans for growth and a receptive market but to make it happen, you need talent.<\/span><\/p>\nThe slow Covid months have created a surge of demand in the economy which should translate to a boom in business growth. Instead, companies are being forced to turn down clients, pause internal projects and scale back instead of scaling up.\u00a0<\/span><\/p>\nWithout the ability to grow, businesses have their hands tied; the shortage of talent is prohibiting everything from transformation and innovation to growth and expansion. What should be a period of substantial success is actually a period of crippling frustration: you see the opportunities but you can\u2019t reach out and grab them.\u00a0<\/span><\/p>\nThis sticky recruitment market will certainly change at some point in the future, but what happens in the meantime? How long can businesses tread water and stay afloat?<\/span><\/p>\nThis month\u2019s unprecedented increase in starting salaries \u2013 the highest in 24 years – is being driven by the near record fall in candidate availability – KPMG, UK Report on Jobs<\/p><\/blockquote>\n
The opportunity<\/b><\/h3>\n
This might sound bleak but don\u2019t worry, we\u2019re getting to the good bit. Problems often hide opportunities – and this one is no exception.\u00a0<\/span><\/p>\nEveryone else may be in stasis trying and failing to fill permanent roles, but you don\u2019t have to be.<\/span><\/p>\nA combined strategy of hiring contract staff to run alongside your permanent recruitment activities, will keep you moving forward.<\/span><\/p>\nBusinesses have always used IT contractors to boost their workforce and achieve growth when perm hires aren\u2019t the right solution. So why aren\u2019t companies doing it now, when they need them more than ever?\u00a0<\/span><\/p>\nThere\u2019s one big reason: IR35. The perceived hassle and cost of using contractors – not to mention fear of getting stung by the IR35 tax rules – is stopping companies from fixing their recruitment problems.\u00a0<\/span><\/p>\n250,000\u00a0<\/b>The number of IT contractors who are available to pick up projects in the UK.<\/span><\/p><\/blockquote>\nBut how long are companies willing to wait? One year, two years?\u00a0<\/span><\/h4>\nEight months into this post-pandemic world, demand shows no signs of slowing. It\u2019s actually continuing to increase. At best, the market might return to some sort of normality by 2025 – but even that\u2019s a hopeful guess. We believe it\u2019ll be at least two years before we see any significant adjustment in the market.<\/span><\/p>\nIf you\u2019ve been trying to fill a role for 9 months, what are your options? Go even higher with your salary offer? Outsource the work abroad? Spend even more on your recruitment drive with no guaranteed outcome?<\/span><\/p>\nThis is a situation that gets worse the more senior you go. As the roles get more senior, the talent pool shrinks. You offer more money to your candidate and while they\u2019re working their three-month notice, their employer outbids you. And now you\u2019re back to square one.\u00a0<\/span><\/p>\nIt\u2019s an exhausting, self-perpetuating problem – and it\u2019s not going to change any time soon.<\/span><\/p>\nMeanwhile, the contract market is sitting there, untapped: a quarter of a million skilled contractors who have the power to plug your IT talent gap.<\/span><\/p>\nWhat to do<\/b><\/h2>\nWhy are contractors an attractive option?<\/b><\/h3>\n
Contractors are a flexible, ready-made workforce. In the UK we\u2019re lucky to have a contractor market that is well-established and highly skilled.\u00a0<\/span><\/p>\nIf you want to get projects off the ground or create change within your organisation, IT contractors can make it happen – and you won\u2019t have to wait six months to get going.<\/span><\/p>\nContractors are easy to hire and quick to get started. A permanent position that takes you six months to recruit for in the current climate could be filled by a contractor in two weeks. That\u2019s no exaggeration.\u00a0<\/span><\/p>\nThey\u2019re used to hitting the ground running; they\u2019ve chosen to be freelance and like to work agile and independently. And while they were once considered expensive, the current market inflation for permanent roles has closed the gap.<\/span><\/p>\n\n- Available<\/span><\/li>\n
- Can start within two weeks<\/span><\/li>\n
- Work independently<\/span><\/li>\n
- Highly-skilled<\/span><\/li>\n
- Competitively priced<\/span><\/li>\n
- IR35 compliant<\/span><\/li>\n<\/ul>\n
The misconception is that compliance is complicated and that you\u2019ll be caught out by HMRC. The truth is that IR35 rules are actually clearly defined and easy to follow when you know how to do it.\u00a0<\/span><\/p>\nTake Control of IR35<\/span><\/h2>\nWhether you\u2019re hiring inside or outside IR35, our ContractComplete service gives you no risk, hassle-free solutions that guarantee peace of mind, value for money and compliance with HMRC.<\/span><\/p>\nGetting IR35 right<\/b><\/h3>\n
Although managing IR35 is not as daunting as it first seems, if you want to hire a contractor, you do need to take the time to understand how it works. As the end client, it\u2019s your responsibility to correctly determine a contractor\u2019s IR35 status.<\/span><\/p>\nInside IR35<\/b><\/h3>\n
Being inside IR35 means that HMRC would categorise the service your contractor is providing as employment, rather than self-employment. In this case, the contractor would be on PAYE; you would be responsible for deducting their tax and NI. This will cost your company more money than hiring outside IR35.<\/span><\/p>\nOutside IR35<\/b><\/h3>\n
Being outside IR35 means that your contractor is deemed self-employed. You would pay them a day rate, leaving them responsible for their own tax return and NI. Prior to the legislation changes, all contractors were paid in this way: you spent less, and they earned more.<\/span><\/p>\nHow to determine a contractor\u2019s status\u00a0<\/b><\/h3>\n
Establishing the IR35 status of a contractor is largely based on how your organisation is structured and how you manage projects. It\u2019s about determining whether or not a contractor is working as an independent provider of services or being treated in a similar way to an employee. There are a number of key factors to consider:<\/span><\/p>\n\n- Supervision, Direction and Control<\/span><\/li>\n
- Substitution<\/span><\/li>\n
- Mutuality of Obligation<\/span><\/li>\n
- Financial Risk<\/span><\/li>\n<\/ul>\n
For a contractor to be deemed outside IR35 (responsible for their own tax and NI contributions), all of these deciding factors need to be absent.\u00a0<\/span><\/p>\nLet\u2019s take a closer look at them:<\/span><\/p>\nSupervision, direction and control:<\/b> Is someone overseeing the work a contractor is doing? Are they being assisted, guided or taught new skills to help them complete the work? Are they being given regular instructions and advice about how the work should be undertaken? Do you have control over the contractor\u2019s work, their hours, and their place of work? Can you move the contractor on to different projects within the company?<\/span><\/p>\nSubstitution:<\/b> If a contractor cannot fulfil their duties, can they send a substitute to do the work? Has this ever happened? Can the hiring company reject this substitute if they wish to?<\/span><\/p>\nMutuality of Obligation:<\/b> Is there a binding commitment on the contractor or hiring company to provide\/offer work?<\/span><\/p>\nFinancial Risk:<\/b> Has the contractor taken on any major financial risk as a result of working for your company? For example, have they invested in the company or bought any equipment or tools to do the work? <\/span>Are you, the company, responsible for repairing\/ managing any substandard work?<\/span><\/p>\n <\/p>\n
If the answer is yes to any of these questions, your contractor would be deemed inside IR35.\u00a0<\/span><\/h4>\nTo be outside IR35, your contractor must be genuinely working independently: you give them the brief and the deadlines and effectively leave them to it. You shouldn\u2019t be managing any aspect of how they deliver the end product. As a contractor, they should be using their own equipment and fully responsible for repairing any defective work. There should be no obligation from either party to continue with the partnership after the project has concluded.\u00a0<\/span><\/p>\nWhat tools can you use to determine IR35 status?<\/b><\/h3>\n
When the tax legislation changed, HMRC provided an online tool (CEST) for determining tax status. Unfortunately, it quickly became apparent that this tool was inaccurate and, in some cases, had wrongly determined a contractor\u2019s IR35 status.\u00a0<\/span><\/p>\nThe best way to determine a contractor\u2019s status is by using the parameters above. It\u2019s a question of how you manage your contractors.\u00a0<\/span><\/p>\nIf you\u2019re struggling, you can work with an IR35 expert (like Identifi Global) to help you work it out.<\/span><\/p>\nWhat happens when IR35 status is confirmed?<\/b><\/h3>\n
Once you\u2019ve determined a contractor\u2019s status, you have four options:<\/span><\/p>\n\n- Inside IR35: Option 1 – Accept the status and pay more to cover the costs.<\/span><\/li>\n
- Inside IR35: Option 2 – Make changes to the way you manage your contractor in order to push them outside IR35.<\/span><\/li>\n
- Outside IR35: Option 1 – Accept that your contractor is outside IR35 and that there are potential risks (HMRC could query this).<\/span><\/li>\n
- Outside IR35: Option 2: Make changes to the way you manage your contractor in order to push them inside IR35 so the risk is eliminated.\u00a0<\/span><\/li>\n<\/ul>\n
How do you decide?<\/b><\/h2>\n
Making this decision is often the trickiest part. It\u2019s mostly down to your risk profile.<\/span><\/p>\nYour contractor may be clearly outside IR35, but for many businesses, there\u2019s still a fear that they\u2019ll somehow be caught out and hit with a huge fine. Should you take the risk-free, more expensive option and push them inside IR35? How big is this risk in reality? What would the cost of potential non-compliance be compared to the cost of bringing them inside IR35?\u00a0<\/span><\/p>\nWe have the tools and experience to guide you through this process and make sure your solution is fully compliant, regulated and indemnified. As well as compliance with HMRC rules, we can help you find a solution that fits within the boundaries of your organisation\u2019s appetite for risk.<\/span><\/p>\nUltimately, it comes down to peace of mind: we can help you make the right decision for your business and avoid unnecessary risk.<\/span><\/p>\nReducing risk<\/b><\/h3>\n
One of the easiest ways to mitigate against IR35 risk and have peace of mind is by hiring an advisor. While contractors are often clued up about IR35, hiring managers aren\u2019t always as well versed. That\u2019s fine; you don\u2019t need to be an IR35 expert, you just need to work with someone who is – and it\u2019s not just about IR35.<\/span><\/p>\nFrom finding the right specialist to setting up contracts and navigating contract law, we help our clients with every aspect of hiring contractors. The new legislation means that if we get it wrong we\u2019re just as liable as you, so it\u2019s in everyone\u2019s interest to ensure we get it right.\u00a0<\/span><\/p>\nWhether your contractor falls inside or outside IR35, their tax status will inform how you\u2019ll work together, and what you can realistically expect from them.\u00a0<\/span><\/p>\nOur Contract Complete IR35 solution uses a contractor\u2019s IR35 status as a basis to navigate everything from contracts to management. It\u2019s designed to cover everything from setting up payroll, reviews and appraisals (inside IR35) to setting deliverables, verifying insurance, measuring success, and ensuring contractor responsibility for work (outside IR35).<\/span><\/p>\nWith the right application, IR35 can actually be an effective business tool. Navigating it correctly will not only help avoid the obvious legal risks, but will also help to ensure the smooth running and completion of your projects. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"Hiring permanent IT & business talent is hard right now. It takes forever, it\u2019s expensive and it\u2019s impacting businesses across the country.
\nLess than two years ago, recruiting for a permanent IT role would take around 8-13 weeks. Now, it can take anything from 3 months to a year \u2013 if you\u2019re lucky.<\/p>\n
You\u2019re spending a fortune on recruitment, you have projects that you\u2019re waiting to get off the ground, client targets to meet, maybe losing valuable staff \u2013 and no talent to do the work, replace leavers or to scale your business.<\/p>\n
Sound familiar?<\/p>\n
The good news is: it\u2019s not you, it\u2019s the market. Covid changed everything \u2013 and when markets change so dramatically, there\u2019s only one option: change your strategy.<\/p>\n
If you\u2019re doing what you\u2019ve always done and wondering why it\u2019s not working, our latest guide will help you understand the current landscape and learn what to do next.<\/p>\n","protected":false},"author":1,"featured_media":15479,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-15473","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/posts\/15473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/comments?post=15473"}],"version-history":[{"count":1,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/posts\/15473\/revisions"}],"predecessor-version":[{"id":16834,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/posts\/15473\/revisions\/16834"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/media\/15479"}],"wp:attachment":[{"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/media?parent=15473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/categories?post=15473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/tags?post=15473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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