• Freelancing is an increasingly attractive way to work. But it can prove a nightmare for recruiters trying to place talent with irregular career paths. How can recruiter software relieve some of the headaches?

• We update you on the latest IR35 developments. The Association of Recruitment Consultancies has given its verdict – and it is not too favourable of the proposals.

• A UK agency could face £32m in losses after failing to comply with national minimum wage rules. The story demonstrates the cost of failing to ensure compliance with working regulations.

Flexibility as Standard in Freelance Britain?

The growing appetite for flexible working arrangements has lead to a spike in searches for freelancer opportunities.

The world of work has changed remarkably over the last ten years. Digitisation and gig economy employment practices have re-shaped the expectations of a generation of professionals. While some of these changes have been criticised for reducing security and clear career progressions, a new study finds a silver lining.

Using its own web traffic data, the job search website TotalJobs reports a significant increase in the volume of applicants applying for flexible roles. In fact, The website detected a 132 per cent rise in the number of web searches looking for freelancing opportunities.

The rapid growth in interest around freelance roles was logged throughout the period 2017-2019. It would suggest that the current generation of workers has not only learned to live within a system of increased insecurity – but also found a way to make it work to their advantage.

And the benefits could be mutual, according to TotalJob’s own press release on the findings. The site suggested that the growing army of contractors in the UK “presents a number of opportunities for employers”.

TotalJobs’ Director, Alexandra Sydney told Onrec that “freelancers often bring experience from multiple industries, adding value to a business”. Ms Sydney said that freelancers can help to introduce “different perspectives and fresh ideas”. As we approach a new era of working alongside digital processes, a fresh pair of eyes on a problem can be an attractive proposition.

Why flexibility remains a puzzle for many recruiters

But the puzzle for many recruitment firms is how to manage this potential. A freelancer’s set of skills may be unique, but they are often hard to document or quantify. Without a clear, linear career progression gained from working in-house, many recruiters struggle to understand their freelance talent.

As recruiter software grows increasingly sophisticated, these puzzles are becoming easier to manage. Recruiter software tools such as semantic search can help to pull a unicorn candidate from a pool of seemingly unrelated skills. Few placements are ever the same, these days. And no two candidates are ever identical.

• READ MORE: Are you putting your recruitment CRM to best use?

Attempting to find certainty within this perfect storm of variables is a task that no human can be expected to accomplish. And yet, it is one of those challenges that a machine can excel at – and outperform gut instinct almost every time.

It means that even agencies that have historically focused on permanent placements are finding freelancer hires easier to manage. Automated processes and smarter skills matching are just a few of the benefits that today’s recruitment software is bringing to Britain’s best agencies.

But where does that leave the employment relationship of organisations and contractors? Ms Sydney concludes that the future of work may be a very different place:

“Employers must look at how to attract the best freelance talent. Offering incentives often reserved for permanent members of staff such as sick pay or holiday can prove fruitful when trying to attract and retain strong freelance workers.”

“Introducing initiatives such as flexible hours or remote working can mean employers benefit from incorporating the best bits of freelance work into the more traditional four walls of the office.”

IR35 Update: recruitment industry expresses concerns

Public sector tax changes draw complaints from recruitment industry representatives, yet preparation for private sector roll-out continues.

We have regularly covered the on-going saga that is IR35 changes. This week, recruiters have had our say in the proposals, as industry representatives delivered a damning verdict during public consultations.

The Association of Recruitment Consultancies (ARC) has voiced concerns over the way the government has implemented its tax status changes.

Among a series of criticisms, ARC cited an absence of scrutiny for the scheme, and failings in the proposed technological solutions. The professional body said that it had been collating and documenting issues with the scheme throughout the consultation period.

ARC chairman Adrian Marlowe summed up the organisation’s concerns. “There are some high level points to do with the principle of the extension in the way proposed. And there are some practical and legal points”.

Voicing recruiters’ concerns: The ARC findings

Mr Marlowe set out the key findings of the extensive consultation carried out by ARC. Below are the main areas of contention, with our own summaries of each of the points.

“1: Chapter 10 public sector rules were never scrutinised”

Mr Marlowe says that scrutiny and consultation which was promised at the beginning of the process failed to materialise. “ARC is concerned that the Chapter 10 public sector rules were never scrutinised by the Treasury Select Committee, despite concerns expressed in 2017 by the Committee itself that there should be a hearing and review in 2017.

2: Self-assessment support is lacking

ARC expressed doubts over the suitability of HMRC’s CEST tool to adequate provide support for self-assessments.

As seen in the past, the online assessment tool has been shown to provide misleading or incomplete rulings to users. There is not other substantive support for businesses at this time.

3: “Requirement of a decision before work starts”

“The original IR35 rules did not require a decision by a hirer or before the work starts.
Those rules required the assessment to be based on the arrangements and contracts used throughout the assignment,
but the new proposed rules totally conflict with that principle.”

4: “Taxes agencies in ways not before considered”

ARC says that: “[IR35] will force payments of companies onto payroll, taxes hirers and agencies in ways not before considered in the private sector and departs significantly from the original IR35 rules.”

5: “The rules conflict with established case law”

Mr Marlowe expressed his concerns that this previous point conflicts with historical rulings on worker status. “In doing so, the rules conflict with established case law around both actual employment status and tax related employment status.”

Impact on larger hirers

While contractors working for small companies will receive a degree of tax relief, those working for larger firms may not.

“The abandonment of the 5% top slice tax relief, which contractors working for small companies will retain under the original IR35 rules, means that new rules will apply to 100% of income for a new class of contractor, those working for larger hirers.

6: “It is a new tax”

According to ARC, the claim that IR35 changes do not constitute a new tax “does not pass muster”.
“It is new, will force payments of companies onto payroll, taxes hirers and agencies in ways not before considered in the private sector and departs significantly from the original IR35 rules.”

7: It breaks election promises.

To summarise, Mr Marlowe makes a political point: that the changes contradict the government’s current election manifesto.

“As a new tax its imposition would appear to contravene the Conservative Party Manifesto at the last election.”

8: Reporting and appeals

Finally, ARC argues that the requirement to assess and report on each case individually is unworkable, sue to increased admin. Instead, the body suggests that it would be preferable to assume that IR35 applies – and then report on exceptions only. This would reduce paperwork and make the transition more manageable for companies of all sizes.

The right of contractors to appeal these decisions also uncovers impracticalities in the system. As we previously saw, hirers must make their judgement prior to the beginning of any working period. At this point, it is often impossible for a contractor to know if they have a case to appeal against. ARC noted that, sometimes, the contractor will not even be aware of who the hirer is at this early stage.

The Case for Consultation

It is clear from the ARC statement that the professional body believes the consultation process is far from conclusive. While many will read the complaints and see them as smaller considerations which may only impact a handful of cases, for other enterprises they may generate an insurmountable level of new paperwork and administration.

Although the public consultation phase is now drawing to a close, it would appear there is still a lot of work left on the table, when it comes to the roll-out of IR35 in the private sector.

Pay Scandal could cost recruiter £32 million

Nottingham-based Agency announced historical NMW breaches this week.

The Nottingham-based recruitment enterprise, Staffline, could be set to lose up to £32 million in earnings, after it was revealed the firm had breached National Minimum Wage regulations.

The news formed part of an ongoing investigation by Her Majesty’s Revenue and Customs (HMRC).

A string of historical irregularities in the firm’s wage compliance is likely to cost the business around £32 million. Additionally, the firm revealed that it has already shelled out £50,000 in legal consultancy in an attempt to address the ongoing problems.

In an announcement to its investors this week, Staffline suggested that the final figure may grow, due to the historical nature of the breaches. The company’s financial performance will be published on June 27th – potentially a key factor in the decision to go public with the ruling beforehand.

In September 2018, Staffline received a £150 million financial package from Lloyds Commercial Banking. In January, the firm forecast annual turnover of more than £1 billion for 2019. This figure represented an 18 per cent growth on the previous year. The news of the HMRC investigation may now put a dampener on those early predictions.

However, Staffline’s CEO Chris Pullen remained confident that Staffline would see no significant dip in its yearly performance. “Whilst the time taken to announce our 2018 financial results is frustrating, we look forward to posting these results at the end of June at which point we expect the business to return to normalised trading”.