IR35 Reforms in the Public Sector

Since the introduction of the new IR35 reforms in the Public Sector in April, where agencies or the Public sector organisation decides whether a contractor is caught by IR35 or not, a number of recruitment agencies including Hays and Parity have shown a fall in profits. They are blaming, in part, the IR35 reforms for this slump.

Many contractors working in the Public Sector have either taken private sector contracts or have been forced to join the payroll or work through an umbrella company. Anecdotal evidence has shown that agencies and organisations are not looking at each individual and assessing their IR35 status, but are treating all the contractors the same, by either informing them they must work through an umbrella company, or putting them on the payroll.

For many, they shouldn’t have been classed as contractors in the first place, and only did so because they were not given any option. For one contractor this meant ending her employment one day, starting as a contractor through her Limited company the next day, and then 9 months later when the new rules came in she was told she has to work through an umbrella company. This was obviously ridiculous, as she has worked for the same employer, doing the same job for the whole period.

In my experience the majority of public sector workers are a different animal to those working in the private sector. So, now there is talk of the same reform happening in the Private sector. However I doubt Private sector companies and contractors will roll over quite so easily- I hope not anyway!