Recruiter welcomes Government pledge to scrap IR35 but warns locum lawyers to “read the fine print”

A director at a recruitment agency who specialises in placing locum legal professionals in public authorities has said the Government's decision to repeal IR35 is "undoubtedly big news", but warned that locums must "tread carefully" and make sure they read the fine print.

Laura Hayward, Group Director at Sellick Partnership, said the plan to scrap IR35 in April next year is  a "big step" which will be welcomed by thousands of locums working in the public sector "who will have been unfairly affected" by the policy.

The off-payroll working rules – otherwise known as 'IR35' – make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same Income Tax and National Insurance contributions as employees.

Councils have been tasked with deciding whether the rules applied where they contracted workers who provide services through their own intermediary since 2017.

There can be significant consequences, including financial penalties, if a council does not apply the correct rules or ignores IR35 legislation.

Repealing IR35, a move announced by Chancellor of the Exchequer Kwasi Kwarteng in the Commons last week, will mean that workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of tax and national insurance contributions themselves.

"This will free up time and money for businesses that engage contractors, that could be put towards other priorities," a Treasury document published in tandem with Kwarteng's speech notes.

The document also claims that repealing IR35 will minimise the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules.

Commenting on the announcement, Hayward, who specialises in the provision of locum, temporary, contract and permanent legal professionals within the public, higher education, in-house and not-for-profit sectors at Sellick, said: “It isn’t that IR35 no longer exists; it is that the responsibility will now fall solely with the contractor who will remain at risk if they are knowingly working in a role that is inside the rules and not paying the correct tax."

She added: "There is a long way to go over the next six months and the government needs to make the stance on this very clear in time for April 2023.

“Since the change in 2017, public sector organisations have worked incredibly hard to understand what the risks are and who they sit with, therefore, I don’t think it will be as simple as flicking a switch and all locum workers are now able to deem themselves outside of IR35."

Hayward said that she also suspects that there may be pushback from some organisations that “have spent the last five years working hard to manage and mitigate their respective risks”.

She added: “Whilst we need to err on the side of caution right now, this news is most definitely a big step in the right direction and will be welcomed by thousands of locums working in the public sector who will have been unfairly affected by the changes in 2017."

Adam Carey