In November, it was reported that the number of temporary employees in the UK increased by 2.4% between July and September, compared to the same period a year ago (ONS).
It is no surprise that businesses have increased their use of contingent workers in the last 12 months, as they navigate the uncertainty and shifting market conditions resulting from the global pandemic. Coupled with ongoing skills shortages and rising labour costs, the use of contingent workers is set to increase in 2021, with a recent Gartner survey confirming that 32% of organisations plan to replace permanent employees with contingent workers.
From 6 April 2021, if you are a medium or large-sized private sector end-user, you are responsible for determining the IR35 status of your workers. For small private sector end-users (under the Companies Act 2006), the intermediary is responsible for establishing worker IR35 status. The impact of such changes should not be underestimated, and businesses must ensure they are prepared, especially in the face of growing demand for flexible workers.
If your business or supply chain does not have the correct documentation and processes in place to hire contingent workers compliantly, you could risk significant financial penalties. As a result, IR35 should feature in all contingent workforce plans going forward. Here is our three-step guide to effective and compliant contingent workforce planning:
The most logical place to start is by uncovering how many contingent workers you have in the business, how much they cost and how long they have been there. Despite the looming IR35 rules, many organisations have little visibility and control over their contractors. Work with all key labour stakeholders to establish:
- Who your contractors are
- What roles they are carrying out
- Who supplies them
- What they are being paid
- How long they have been working for you
- How they are engaged, i.e. directly, through an umbrella or personal service company (PSC)
- Whether they are engaged compliantly and, if not, the action required to ensure immediate compliance.
The next step is to assess whether you are using contractors in the most cost-effective and efficient manner. Ask yourself:
- Could permanent workers carry out contractor activities?
- Could permanent employees be cross-trained to carry out that work?
- Could the work be done as an outcome-based project rather than a day rate contract?
A Contingent Workforce Audit reviews each role that is being carried out by a contractor to establish if there is a better and/or less expensive way of providing that resource. From this point, a plan can be developed to ensure those changes happen, keeping compliance, business continuity and delivery in mind.
The nature of a flexible workforce means that it is continually changing in line with the needs of your business. If the right governance and processes are not set up correctly as a business to record, monitor and govern the use of contractors, you may find yourself back at square one, with a non-compliant and costly workforce.
Omni partners with organisations to:
- Review existing systems, advising how to adapt them to accommodate contingent worker data or recommend new tools to help them manage the information.
- Produce well-documented policies and processes for finance, recruitment and procurement functions to maintain control of who is hired into the business in future.
- Benchmark market rates to ensure they continue to get value for money across their contractor population.
- Achieve complete compliance through connecting them with a dedicated team of experts responsible for ensuring robust measures are in place to cover onboarding, insurance and IR35.
Unlock business agility through workforce planning by downloading our free guide today. Follow the link for your copy: Adapting to Agile: The flexible solutions you need to ease business recovery.