After a lengthy reputation as the “softer” sector, the one where people just plod along, with a misconstrued perception of easy hours and an easy life; in recent years Local Government has fought back and proven that it is fast becoming incredibly resilient, innovative and creative. Having rivalled the private sector with its ability to change, adapt and explore new models of working.
In light of recent IR35 tax legislation changes, I thought it prudent to share some insight on the subject, with the aim of helping employers in the public sector to retain and attract specialist contract resource.
Last month, I received a very brief email from an internal recruiter at a competitor that started with “Latte or Americano? It's a question worth answering if you wanted to meet up for a confidential coffee chat one day”.
It was very cheesy, but for me he missed the point; and an opportunity to sell his brand – he told me nothing about the company, the team or why I should respond.
But it did get me thinking about employer branding and how charities can also do more to increase theirs. In a competitive recruitment market, employer branding is everything, but is often overlooked.
What comes to your mind when you think of the HR professional? The CIPD would hope that you are thinking of someone being Principles-led, Evidence-based and Outcomes-driven, but is this too idealistic?
During the last 18 months the NHS interim recruitment market has witnessed several significant changes. Firstly, NHS Improvement applied maximum pay and charge rates for temporary workers for the provider organisations that they oversee. The need for such restriction on interim spend was necessary in some areas, but this ‘one rule fits all’ solution was clearly not fit for purpose in areas where the worker’s core skillset was not NHS specific (e.g. IT, Corporate Services, Change & Transformation) and the new capped rates were not competitive with general market rates. Secondly, the change to IR35 assessments only within the Public Sector has made it highly likely that, as of 6th April 2017, a contractor working through their own personal service company will now pay significantly higher levels of tax for an assignment within the NHS compared with a like-for-like contract within the private sector. These two factors alone have combined to make interim work within the NHS less attractive for contractors compared to just 18 months ago.
Recently, I arranged a webinar aiming to increase contractors’ knowledge of the changes affecting payments made to personal service companies (PSCs) in the public sector, with IR35 being operated by agencies rather than PSCs. While the presentation, led by The Adecco Group’s Employment Tax Manager, was very well received, the Q&A session highlighted an alarmingly low level of understanding among some contractors about the legislative changes, which are due to come into effect on 6 April 2017.
In April, changes to the IR35 legislation will impose a huge change on the public sector interim market.
For those caught by the legislation, workers through their own limited companies will be subject to withholding of tax and NIC on payments received, with the payer also incurring employer’s NIC and Apprenticeship Levy costs on top the payments. Read more.
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