The current state of play
The COVID-19 pandemic has not only changed the location and timings of work, but also permanent employment, which is well and truly on the wane. As companies cut back on permanent, in-house resources, flexible employment has exploded. One in seven UK workers are now on flexible contracts, up 25% in two decades. The acceleration to flexible employment is spread across a wide range of industries, including construction, IT, healthcare, retail and logistics.
Powered by contractors and temporary workers, employers have the agility to respond to changing market requirements building bespoke workforces rapidly when and where they are needed. A critical element to the success and recovery of the UK as it progresses forwards with vaccination programmes and COVID-19 restrictions easing. Contractors are now specialists who deliver their expertise when in demand, across an array of industries, opening up the possibility for great rewards.
Adding fuel to the temporary worker supply chain fire
This growing segment of employment is fueling an expanding layer of companies between the company requiring the work and the specialist delivering. These recruiters, Professional Employer Organisations (PEOs) and ‘umbrella companies’, offer solutions to paying salaries to, and taxes on behalf, of contractors.
However, the rapid evolution of working practices, with workers now demanding choice over how, when and even where they work, is moving at a much greater velocity than legislation. The UK government is trying to keep a reign on activity, recently implementing reforms to IR35 to provide clarity for off-payroll working. Plus, HMRC issued guidance for working via an umbrella company – a watershed moment for the temporary labour market.
Despite best efforts, payroll and compliance issues are still apparent. These range from the correct handling of holiday pay, who’s inside or outside of the new IR35 changes and tax avoidance, whether it’s deliberate or accidental.
Keeping on the right side of compliance issues in a growing supply chain for temporary workers’ payroll is highly complex, making regulation a mammoth task for finance teams to undertake. These complexities only rise with scale.