Time to prepare for off-payroll 2020
For anyone caught in the headlights of the proposed changes to off-payroll working, we have received two pieces of relevant news in the last couple of days.
The Chancellor of the Exchequer, Sajid Javid has announced that the budget will take place on Wednesday, 11th March 2020; and the Government has launched the promised review of the proposed changes to off-payroll working rules, which are due to take effect on 6th April 2020.
The review is expected to be completed by mid-February, so along with the timing of the budget there will be very little time for individuals and businesses to react.
Whilst many might hope that the off-payroll changes will be amended, delayed, or even cancelled, the advice for all is to prepare.
What are the proposed changes to off-payroll working?
In short, the proposed changes to off-payroll working are such that all but the smallest of companies engaging workers through their own limited company will become responsible for assessing the employment status of their workers for all payments made on or after 6th April 2020.
For any worker deemed to be operating similar to an employee, the end client will now be required to pay employers national insurance contributions and the organisation paying the workers limited company will be responsible for calculating and deducting tax and national insurance from the deemed employment payment.
Given the additional responsibilities and risks hiring organisations now face, many have taken the decision to stop hiring workers through their limited companies, with the popular alternatives being to join a payroll umbrella or their own payroll on a fixed term or permanent basis.
What should companies be doing to prepare?
Right now, hiring organisations should urgently consider the following:
Setting up an internal team comprising of Senior Management, Finance, Legal, HR and IT to steer their business through the changes.
Assessing their workforce to prioritise which workers should be assessed first e.g. business critical, high risk, medium risk, low risk, etc.
Review contracts with staffing companies and workers to identify what changes will be required to accommodate the proposed legislation.
Review IT systems and processes to ensure they are fit for purpose
Review budgets and how they will be impacted post 6th April 2020
Engage specialist resource to help them make assessments for employment status
Based on completed assessments, decide whether to change the engagement model and hiring rates for affected workers e.g. use a payroll umbrella; move to outcome-based contracts, offer employment on a fixed term or permanent basis, etc.
Review their labour supply chain for compliance and communicate the outcome of assessments, by issuing a Status Determination Statement for each affected worker
Conduct face-to-face discussions with affected workers to share the Status Determination Statement and explain how this will affect their engagement going forwards
Set up a process to deal with challenges to the Status Determination Statement
Implement a process to continually review thereafter