The new off-payroll legislation brings a challenge to the status quo alongside an exciting opportunity to embrace genuine, project-based working in our industry. Harpreet Dhillon, Head of Making People Happy, and Jo Williams, Head of Purposeful Engagement, set out what the new rules could mean for freelancers and clients.
Working differently means many different things in 2020. At The Difference Collective we champion effective and flexible working practices that deliver great results for clients. Freelance and contract working are two of the routes that talented communications professionals in the healthcare sector choose to achieve that, whether as direct contractors or providing services as sole traders or through a Limited Company.
The changes to off-payroll working rules matter to our members and to clients, because they impose new obligations and more stringent definitions of employment. Responsible organisations and workers are looking closely at terms of business to see how the new law could define our business relationships.
IR35 in a nutshell
IR35 is a cause for concern to our industry because some contractors may soon be defined by HMRC as employees. This means the employing organisation has a responsibility to put them on payroll, tax them and take NI contributions at source as well as provide an employment contract and employment rights. This change of status could increase workforce costs and reduce flexibility for companies who routinely use longer-term contractors. Going in-house may not be an appealing choice for third party workers, who prefer the professional freedom and financial rewards of contracting.
The new working rules are a political hot potato, with many large and influential organisations highlighting their concerns. The government’s review of the changes to the off-payroll working rules has now concluded and the legislation will come into full force from 6 April 2020. Freelancers are the fastest growing part of the UK and European workforce and with this new legislative minefield to navigate, public opinion has become increasingly visible.
The issue is freedom of working choice
So, what’s The Difference’s position? We agree that permanent contractors should rightly be treated as legal employees – long-term contracting shouldn’t be a way to avoid legitimate taxation or employer responsibilities. But we continue to advocate strongly for individual workers’ rights to work differently to suit a range of organisational and individual requirements.
We believe that freelance and contract approaches have their place in offering agile and cost-effective ways to access professional talent. In our experience, this is particularly true for surge support – when short-term or project-based people are needed to deliver a particular output – and for specialist skills and experience needed responsively, to augment a regular team. Our clients want the right people at the right time to deliver to specific goals. They don’t want or need those people sitting on payroll the rest of the time when their particular skills aren’t needed. As we see it, that’s not the point of IR35!
Genuine flexible working delivers exceptional results
Our client Kate Evans, Marketing Director at HRA Pharma, summed up the client benefit of the flexible, freelance model brilliantly: ‘In my professional experience you can have no more committed individual than one who wants to work flexibly, to optimise their work/life balance. This is what The Difference Collective harnesses in its Collective of flexible workers. The team who have worked on my account have more passion and determination to achieve our objectives and get the job done than 99% of my past traditional agency teams.’
The Difference in practice: a positive approach to IR35
IR35 is a key issue for everyone who works with The Difference – that means it’s a no-brainer for us to develop and establish best practice in our approach and processes, to create transparency and value both for members and clients.
So, what are we doing to influence and support the healthcare market in its response to IR35? Firstly, we’re reminding clients and professionals why we advocate working differently – to unlock value, creativity and energy. Shorter term and project-based working isn’t a way to dodge payroll obligations. Properly managed and executed, it’s a way to enhance performance, productivity and competitiveness and foster agility in our healthcare and pharma sector.
For our members, we’re making sure everyone is equipped to assess their own situation in light of IR35 and understands their choices. Almost all our members took part in our recent IR35 preparation webinar and it’s great to hear that it’s given them the insight they need to work within the coming legislation.
With the support of our employment and contract lawyers, we’ve worked with our clients and consultants to determine the status for services carried out from 6 April 2020 onwards. We’re making some changes to the standard agreements we use for members and clients, to reflect the legislative changes.
We acknowledge that when a client wants a long-term team member to strengthen their resources, an employment relationship may apply. In this instance we’ll gladly recommend a trusted, vetted and willing Difference Collective member and charge a one-off introduction fee. We are not going to collect tax on people’s behalf and don’t plan to operate as a contractor shop or umbrella company.
It’s time to embrace a shift towards genuine, project-based working
Our clients and members who’ve experienced the results of working differently through our selective freelance model want to embrace the benefits of that different way of working. We are collectively hopeful that IR35 will create a market shift – so there’s even greater appetite for, and access to, talent through genuine project-based working.
The value of The Difference Collective is in bringing together talent to deliver phenomenal results in a virtual agency and freelance model. It’s about a genuine project-based, freelance approach. So, we can confidently say we’re on the right side and in the right place to meet the new IR35 legislation.
About the Authors
Jo Williams is a freelance marketing consultant with more than 20 years’ healthcare marketing experience. She takes an insight-driven approach and has a keen eye for what’s new and making the biggest difference to brands in their marketing activity.
Harpreet Dhillon is our Head of Making People Happy at The Difference Collective and has over 20 years experience working in HR. She is passionate about ensuring people bring and give their best every day.