Contractors: IR35 & general discussion

[Olivera]

aeropilot said:

The problem is in some industries, 2 years is too short.
In mine, 5+ years for site based project duration isn't uncommon, and so project knowledge, especially at the end when trying to provide handover documentation and as-built information is very important to the ultimate end client.
This is the problem with a one-size fits all Govt mentality to such a wide variety of industries and situations.

I fully agree. Complex IT and engineering projects may legitimately require contractors for many years.

I don't accept the notion that only short term, multiple client contractors are outside of IR35. The nature of IT and engineering is that of longer term work. It would be absurd if only simpler shorter term and less highly skilled sectors (tradesman, housing etc) were categorised as outside IR35, but longer term higher skilled sectors were inside.

Fortunately the IR35 legislation agrees with me here, and I've reiterated it many times on this thread - many clients and shorter term engagements are not key IR35 indicators.

[768]

aeropilot said:

wombleh said:

I personally think the company should just create a permanent project team for that sort of setup.

If only it works like that in real life.
The problem is specialist experience, as permie's simply don't want to spend that amount of time on a project to gain such experience, as by default they want to move around to climb the career ladder, or the high level management decide to move someone to do something else.

Of course, they can always make a contractor a permie offer, I've seen countless offers made...

[aeropilot]

768 said:

aeropilot said:

wombleh said:

I personally think the company should just create a permanent project team for that sort of setup.

If only it works like that in real life.
The problem is specialist experience, as permie's simply don't want to spend that amount of time on a project to gain such experience, as by default they want to move around to climb the career ladder, or the high level management decide to move someone to do something else.

Of course, they can always make a contractor a permie offer, I've seen countless offers made...

So have I....

Had quite a few myself.

[Gazzab]

Olivera said:

aeropilot said:

The problem is in some industries, 2 years is too short.
In mine, 5+ years for site based project duration isn't uncommon, and so project knowledge, especially at the end when trying to provide handover documentation and as-built information is very important to the ultimate end client.
This is the problem with a one-size fits all Govt mentality to such a wide variety of industries and situations.

I fully agree. Complex IT and engineering projects may legitimately require contractors for many years.

I don't accept the notion that only short term, multiple client contractors are outside of IR35. The nature of IT and engineering is that of longer term work. It would be absurd if only simpler shorter term and less highly skilled sectors (tradesman, housing etc) were categorised as outside IR35, but longer term higher skilled sectors were inside.

Fortunately the IR35 legislation agrees with me here, and I've reiterated it many times on this thread - many clients and shorter term engagements are not key IR35 indicators.

But the court cases etc are now irrelevant. So we need a new solution. It could be that a 2 year limit stops all the joe average programmers sitting there as disguised employees. The short termers remain outside. The skilled long termers find a new way to engage eg to perm via a consultancy and get long term bonus incentives.

[Clockwork Cupcake]

aeropilot said:

So have I....

Had quite a few myself.

Me too.

At one client the CTO took me out to lunch in order to make me an employment offer complete with pre-IPO share options. Which was very flattering, I have to say, but I gracefully declined.

(They never did make an IPO so the share options were ultimately worthless).

At another client, where I was similarly offered a perm job, the pitch began with "I know you're going to say 'no', but I have to ask... "

Again, very flattering but it's just not where I see myself. Or, rather, saw myself. I might have to consider it now, I guess.

[Olivera]

Gazzab said:

It could be that a 2 year limit stops all the joe average programmers sitting there as disguised employees. The short termers remain outside. The skilled long termers find a new way to engage eg to perm via a consultancy and get long term bonus incentives.

I'd rather not have any additional arbitrary limits or stipulations placed on LTD company contractors.

One has to wonder why it's fine for established large consultancies that place workers with other businesses to show every IR35 red flag in the book: exertion of control by the end client, can move from task to task as end client sees fit, interview of candidates and any replacements by the end client etc. Of course IR35 does not apply in this case as the consultancy workers are perms.

However the pertinent questions remain: why should small consultancies be penalised with additional legislation? Isn't this a huge bias towards larger established players? How do small consultancies become established larger companies with multiple employees if all of these barriers are in place?

[Clockwork Cupcake]

Olivera said:

However the pertinent questions remain: why should small consultancies be penalised with additional legislation? Isn't this a huge bias towards larger established players? How do small consultancies become established larger companies with multiple employees if all of these barriers are in place?

How indeed.

Why, it's almost as if a consortium of large consultancies are actively lobbying to stifle competition.

[aeropilot]

Clockwork Cupcake said:

Olivera said:

However the pertinent questions remain: why should small consultancies be penalised with additional legislation? Isn't this a huge bias towards larger established players? How do small consultancies become established larger companies with multiple employees if all of these barriers are in place?

How indeed.

Why, it's almost as if a consortium of large consultancies are actively lobbying to stifle competition.

In my industry, its the large consultancies that are going to be most affected by this change because of the contractors they use.
I've heard that two of the biggest have been very pro-active in making arrangements to ensure at least some of them are kept 'outside' to ensure ongoing projects are delivered.
Many are taking a blanket approach though, usually those with offices abroad when they can outsource the work to instead.

[98elise]

aeropilot said:

wombleh said:

aeropilot said:

The problem is in some industries, 2 years is too short.
In mine, 5+ years for site based project duration isn't uncommon, and so project knowledge, especially at the end when trying to provide handover documentation and as-built information is very important to the ultimate end client.
This is the problem with a one-size fits all Govt mentality to such a wide variety of industries and situations.

I was on one project that ran about 15 years in energy sector, run by contractors.

I personally think the company should just create a permanent project team for that sort of setup. They could give the staff a payoff at the end or bench them for a few months while they find something else to use them on.

If only it works like that in real life.
The problem is specialist experience, as permie's simply don't want to spend that amount of time on a project to gain such experience, as by default they want to move around to climb the career ladder, or the high level management decide to move someone to do something else.
The problem with permie staff is company politics and HR departments. The ones that are good and/or suck up to the right people don't hang around long enough to be of long term use (or go contract ) which just leaves the dregs......

This

As a permie I was in a senior position with tons of experience. I would not be interested in a semi permanent project team role with zero prospects.

As a contractor I'll take any work I can get. That often means work way below my capabilities, but that's part of contacting.

[YouWhat]

I think the reason a number of contractors are kept as contractors is because of the the fixed pay scales many large organisations have. In this country engineers are undervalued and to get up the pay scale in a lot of businesses you have to make the transition to management. All the very best engineers don't want to do this, contracting is the only way to get the rewards these people deserve.

[aeropilot]

YouWhat said:

I think the reason a number of contractors are kept as contractors is because of the the fixed pay scales many large organisations have. In this country engineers are undervalued and to get up the pay scale in a lot of businesses you have to make the transition to management. All the very best engineers don't want to do this, contracting is the only way to get the rewards these people deserve.

Very true.

Its why this IR35 issue will have a bigger more negative impact in the Engineering industries in the UK more so than in other parts of the world where Engineers have a much higher standing as a Profession.
But Govt have put all its eggs in the service and finance industry basket, so don't really give a stuff.......

[768]

Even the finance industry sits on the work of software engineers these days though. I'm not sure it's immune.

[Anubis]

This article is a pretty good read and tries to explain to others that struggle to grasp and empathise with a contractors situation.

[rustyuk]

For me it's not the IT Industry that has caused this refocus on IR35 but Doctors, Nurses and TV Stars.

I've never seen a front page news article highlighting the large day rate of an IT worker but I have seen various news articles on Doctors earning 2k a day etc or football presenters pushing 2 million through their PSC.

Now there is an argument that actually a Doctor working in A&E earns his 2k whereas a PM for a large IT project with a Prince2 Cert doesn't earn his £500. For me I have no problem with a Doctor operating as a business, they have worked hard and spent lots to get qualified.

Personally, my current client has made a blanket decision to place everyone inside. It's probably the most outside contract you can get. I work from my own office, using my own kit, buy my own software. No expenses, I pay for my own travel to visit my client. No direction or control, substitutes have been used.

I've declined their offer to transfer to inside and I'm going to use the time to update my skills, get a couple of Certificates and start looking again in June.

Though I would be happy to start a new inside contract with a new client but the main issue is when you breach 50k within PAYE as then dividends become very expensive. Yes, all nice problems to have but still something to consider.

Recruitment agents are already gearing up to make even more cash, commission from Umbrellas, obscure handling charges the list goes on.

[aeropilot]

rustyuk said:

Recruitment agents are already gearing up to make even more cash, commission from Umbrellas, obscure handling charges the list goes on.

[Clockwork Cupcake]

rustyuk said:

For me it's not the IT Industry that has caused this refocus on IR35 but Doctors, Nurses and TV Stars.

I view it from a different perspective.

IR35 has always been about the IT industry. But, as you say, IT contractors don't make the headlines and hence sway the public consciousness. However, TV stars and other media personalities do, and hence have been used to drive public opinion.

The other aspect is the rise of the Gig Culture and zero-hours contracts, which have allowed the government to spin this into a 'good' thing because they say they are protecting these people who are genuinely disguised employees and, furthermore and crucially, would actually want to be full employees.

In my 20 years as an IT contractor, I have always felt like we are being specifically targetted with an agenda to stamp us out. I do acknowledge that my opinion is necessarily biased and may be incorrect, of course.

[Clockwork Cupcake]

rustyuk said:

Personally, my current client has made a blanket decision to place everyone inside. It's probably the most outside contract you can get. I work from my own office, using my own kit, buy my own software. No expenses, I pay for my own travel to visit my client. No direction or control, substitutes have been used.

Blimey! That's not good news at all. That doesn't bode well for the rest of us. You couldn't get much more outside than that!

I'm in a similar situation, apart from the substitution. My only saving grace is that I can afford to play hardball on this as if I terminate they are going to be in a massive pickle. Nobody is irreplaceable, of course, but their lead time to bring in someone else and get them up to speed would be enormous. It was only because I have years of experience in quickly getting up to speed on a legacy codebase that I was able to manage it myself!

Incidentally, that's another differentiation between a salaried employee and a contractor. We're expected to hit the ground running from day one - it's part of the service we offer. An employee would expect a comfortable month or two to get up to speed, going on training courses, inductions, etc etc.

[aeropilot]

Another familiar story about blanket decision from a major company, despite the minister for whatever denying that's happening.......

https://www.theregister.co.uk/2020/02/24/bae_puts_...

[98elise]

YouWhat said:

I think the reason a number of contractors are kept as contractors is because of the the fixed pay scales many large organisations have. In this country engineers are undervalued and to get up the pay scale in a lot of businesses you have to make the transition to management. All the very best engineers don't want to do this, contracting is the only way to get the rewards these people deserve.

Also true in IT. Lots of people enjoy their work, but don't like management roles (me included). My strengths are in getting stuff done, not budgeting and planning.

[Clockwork Cupcake]

98elise said:

Also true in IT. Lots of people enjoy their work, but don't like management roles (me included). My strengths are in getting stuff done, not budgeting and planning.

Totally.

One of my (many) reasons for going freelance was so I couldn't be promoted out of what I am good at and enjoy.

I have met far to many managers who have wistfully told me "I was a programmer once, until I took an arrow to the knee".