The changes to IR35 rules that are being rolled out in the private sector are especially relevant to Eton Bridge’s clients, both companies and contractors. However, many businesses are uncertain about how the rules will apply and what additional responsibilities they will have.
This knowledge gap, with both clients and contractors unsure of the rules, meant there were issues with incorrect determinations. This was compounded by the fact that the required assessments were often carried out by junior HR staff who lacked the necessary understanding of the legislation.
As a result, many companies were wary of taking on new limited company contractors or even considered terminating existing agreements if they were not willing to take on the additional costs required if a role was deemed inside IR35. In some cases, this has resulted in companies even imposing a blanket ban on the use of limited company contractors because they do not feel able to adequately assess their individuals’ status.
At the same time, individuals themselves were leaving clients that would deem them to be within IR35 in favour of opportunities where they could remain outside the legislation. Ultimately, around ten per cent of Eton Bridge’s client base saw contractors leave as they were unwilling to accept being considered inside IR35, when they knew they could find positions elsewhere where they would be outside the legislation.
How Brookson Legal helped
Eton Bridge therefore turned to Brookson Legal to help close this gap. We assessed all the agency’s existing assignments, amounting to some 250 contractors, many of which would either have been lost or converted to permanent staff.
This helped the firm with internal planning, while the internal knowledge and understanding gained from this also enabled Eton Bridge to educate its own clients and assist with their assessments. Prior to this, many businesses were ill-informed and making inaccurate determinations that may have resulted in them losing contractors.
The assessment conducted by Brookson Legal found fewer than 20 of its clients would fall within IR35. However, it also identified a small number of limited contractors who had been incorrectly determined to be within IR35. This also highlighted several contractors who were clearly outside IR35, but had been forced to leave as their client had made an incorrect determination.
Eton Bridge’s employees are now able to use the knowledge and understanding gained from Brookson Legal’s expertise to support their clients, hiring managers and contractors. It allows them to start conversations with clients and gain clarifications on how they are interpreting the new rules, offering advice where appropriate.
Education is key. When the client totally understands the legislation and the rules, the determination is likely to be correct and the process is much simpler. This will be vital in ensuring contractors are treated fairly under new IR35 legislation and clients do not feel the need to resort to blunt instruments such as a blanket ban on hiring limited company contractors.
We are working hard to ensure that our clients have all of the information required to make an accurate assessment, and Brookson Legal is playing a key part in that.
Steve Deverill, Head of Business Transformation & Technology Practice
ABOUT BROOKSON LEGAL
Brookson Legal are a team of knowledgeable and experienced lawyers who specialise in IR35 and helping hirers of flexible workers comply with the law. Our unique combination of experience, expertise and credibility means that we are the obvious choice for hirers who want to assess their existing flexible workforce and get ready for April 2021, when changes in the Private Sector come into effect.