The implementation of IR35 has had well documented market impact in terms of attitudes to both the commissioning and supply of interim resource within the public sector. While the legislation itself was not new, its more stringent application has triggered some commercial disruption and accelerated a re-shaping of the market. Our recent interim survey gauges impact for interims and what shape the market might take in the future. You can access the survey here.
By Loren Price
Senior Consultant, Local Government Interim Leadership
Unless you have been on a very long sabbatical to a deserted island without access to wifi or other media, you have almost certainly been involved in some discussion and debate around the implications of IR35. Let’s not prolong that debate, but think ahead to some of the likely consequences. IR35 is designed to capture ‘disguised employees’ and collect tax and NICs at source. We are frequently hearing of senior interim managers currently in contracts deciding not to take up contract extensions, as well as those who are now proactively looking to return to permanent employment or to move to opportunities within the private sector.
In the short term, there will almost certainly be a reduction in the number of qualified interims operating within the public sector market. If supply diminishes, it will be increasingly important for organisations requiring interims to re-focus on what the demands of the role will be and what success criteria will look like. These discussions need to start from the outset when the need for additional interim capacity is identified.
With IR35 legislative amendments shortly coming into force, clarity on the role of the interim and what is required as an outcome of the assignment is crucial in determining whether the roles sits inside or outside of IR35. This detail should be documented and presented to potential interims so that they are aware of this upfront. Candidates, increasingly, will want to see evidence of expected outputs before they express an interest in a particular piece of work, in order to price their bid accordingly. There is no longer any wiggle room to iron out details at a later stage. Participation at this stage from the person ultimately responsible for the delivery of the work is key. We suggest a direct verbal briefing– that way we are able to challenge any assumptions made about the market and the attractiveness of an assignment, as well as explore where alternatives could be considered. While HR team and procurement teams will continue to play an important role in managing process and commissioning the assignment, the end decision maker will need to play a more upfront role sooner. This time spent with their consulting agency at the start of the process will ultimately ensure not just a more efficient recruitment, bit significantly reduce the risk of making wrong decisions that will bite back at a later stage.
Briefing better and earlier might sound an obvious task, but requires more thought and decision making than some organisations invest. Alongside my colleagues, I work with a large number of clients in local government nationally and it’s fair to say the information we receive at the outset varies greatly. Often we are presented with just a job description, which may be relevant for a permanent role (which the interim assignment may or may not be covering), but doesn’t tell potential candidates anything about the real and pressing priorities or the expectations in terms of outputs within a set timescale. When recruiting on a permanent basis, you wouldn’t expect to issue job description and get the right applicants, without providing further narrative around the context, so the same rule applies to interims. Interim managers, arguably, make even better use of this type of briefing; their broad experience of reading situations, assimilating data and cross referencing against previous multiple experiences means that they can arrive at good judgements quickly. One of the interim managers I am working with at the moment said they would be most attracted in those assignments where as much information as possible was made available right at the outset, stating that ‘I don’t want to waste my time or efforts…or that of a potential client’.
In a future IR35 landscape, what else will impact their choice as to whether to move forward with your organisation or another? Here are some of the reasons given by our network:
- Clarity of outcomes – assignments that don’t ‘drift’ into other areas. The impact of mission creep on IR35 scope is highlighted with the question on the HMRC tool around whether the client can move an interim worker to a different task or project than they originally agreed to do without the need for a new contract or without that individual’s agreement.
- A challenging assignment requiring high levels of pace to meet targets/deadlines – equally maintaining the status quo was something that would actively discourage many interims from pursuing a particular piece of work.
- Where transformational change is needed to teams or processes.
- Flexibility to input their own experience or try innovative approaches – assignments that are seen to be very prescriptive will almost certainly put potential consultants off.
- The opportunity to try new things, learn new skills, wrestle with intractable and hitherto unseen challenges, build new relationships.
- The chance to feel that you can add more value than a substantive postholder would be able to offer in the same time period.
While the information at the outset impacts greatly on finding the right person quickly, ongoing communication between the end client and the interim manager is crucial to the success of an assignment. When expectations are not clear at the outset and regular communication is missing, discord is likely to ensue between the client and the interim’s view of the work delivered at the end of the assignment.
Another of our network of contacts commented that ‘providing what’s requested rather than what is actually needed’ led to outcomes that weren’t always deemed to be a success. Successful interims will challenge what is being asked of them and many prefer to be engaged right at the outset, to be part of the scoping of a particular of issue. They also want to ensure that they are leaving behind a sustainable legacy, which may mean the ability to upskill existing employees, or put in place new ways of working. All organisations hiring interims should be focused upon holding the Limited Company/individual to account against the agreed deliverables and not simply a measure of how many days an interim has worked.
Given the ever increasing scrutiny on spend for local authorities, there needs to be clear, evidenced rationale behind engaging interim capacity and thought through agreement amongst all stakeholders as to what value for money equates to in terms of outputs. The implications of the changes to IR35 undoubtedly mean that competition for the best interims will increase further. We will be working hard with local authorities to frame their requirements as clearly as possible in order to attract the strongest talent in the market.
(This article was originally published in The MJ, March 2017)