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Tag: Contractor Workforce

Uber, Lyft and others get legal win

Ruling opens the door for gig drivers as drivers considered independent contractors

The California Court of Appeals ruled Monday that companies such as Uber, DoorDash and Lyft can classify their rideshare and delivery drivers as independent contractors under Proposition 22.

Theresa Rutherford, executive board member of SEIU California and President of SEIU 1021 commented: “The Appeals Court upheld the fundamental policy behind the measure — to protect the independent contractor status of app-based drivers in California while providing drivers with new benefits,” said a statement by the Protect App-Based Drivers and Services coalition.

“The right to join together in a union is the most powerful way for workers to challenge gig corporations’ exploitative business model that profits off of paying low wages and silencing its workers,”

“Today’s ruling opens the door to the possibility for gig drivers and delivery workers to transform their industry through a strong voice on the job,” Rutherford said. “However, the fact that these workers are still being denied the basic protections most workers have in California is a travesty.”

Proposition 22 came about after the California Legislature passed AB 5, which aimed to make it more difficult to classify workers as independent contractors.

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52% of recruitment agencies concerned with IR35 reforms

65% of agencies expecting to place more applicants this year

According to research by by digital payroll solution for contractors, Cool Company, talent shortages were one of the greatest recruitment agency challenges of 2022. More than a third (39%) of the recruitment agencies involved in the research, cited lack of applicant talent as causing problems in 2022. With a further 20% saying that they believe the same problem will cause issues this year.

Surveyed recruiters highlight other concerns such as the demand for higher salaries, which proved challenging for 39% of recruiters in 2022 and is a concern for 14% in 2023. While a further 39% said that attracting the right candidates was a difficulty last year, but is less of a concern this year. With more recruiters worrying about the ability to hire quickly (15%) and the cost-of-living crisis/inflation (14%) in 2023.

Following the difficulties surrounding IR35 reforms during the last two years, compliance also remains a point of unease. With 52% of recruitment agencies either somewhat or very concerned and 43% of agencies saying that IR35 compliance has caused them difficulties when recruiting for contract positions.

However, for most (85%) the outlook for 2023 is positive, with 65% of agencies expecting to place more applicants this year and 74% saying that it’s either likely or very likely that they will grow their team in 2023.

Kris Simpson, Country Manager UK at Cool Company, commented: “2022 raised a range of difficulties for recruiters. With economic instability, and the global talent shortage creating unfillable vacancies. But while this problem may have previously been remedied by outsourcing, difficulties with navigating IR35 legislation has obviously impacted that process.

As we settle into 2023, talent acquisition remains a concern for many businesses, recruiters are up against it, matching applicants who expect higher pay with businesses looking to reduce overheads. However, despite the challenges, it is encouraging to see such optimism in the sector.”

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61% of contractors widely positive about contracting

49% of contractor work coming from clients outside of the UK

New research by Cool Company, the digital payroll solution for contractors, has revealed the overall outlook for the contractor workforce sector is positive, despite the UK heading into a recession. The research found that just over three-fifths (61%) of contractors are feeling positive about contracting as a whole, with many working with overseas clients hoping to avoid the UK’s economic contraction.

The data revealed that contractors are looking beyond the UK to shore up client worries with an average of 49% of contractor work coming from clients outside of the UK in the last 12 months. 42% of contractors surveyed said that just more than half (51%) or more of their work currently comes from non-UK clients, while 55% of contractors expect that figure to increase in 2023.

Despite the confusion of IR35 reforms and then potential Off-Payroll legislation repeal, most contractors are now feeling more positive about the industry at home. Almost two-thirds (64%) of contractors surveyed believe that all clients will increase their use of contractors over the next 12 months and more than a quarter (26%) of contractors use recruitment agencies to source new clients.

Kris Simpson, Country Manager UK at Cool Company, commented: ‘2022 has been difficult for most people, with considerable economic and political uncertainty and coming on the back of last year’s IR35 reforms, it could potentially have caused significant difficulties for contractors.

‘The fact that contractors have found new ways of working, using umbrella companies and recruiters to connect with both British and overseas clients, testifies to the versatility of our contract workforce. So, although the UK’s economic outlook may be grim, I think there is some justification for the positivity currently found amongst contractors.’

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Demand for contractors continues to rise

Contractor rates spike amid skills shortages

New data from the Association of Professional Staffing Companies (APSCo)has revealed that UK businesses are paying more for contractors as skills shortages and economic uncertainty continue to drive demand for temporary support.

According to the data provided by Bullhorn, there was a 3% month-on-month increase in contractor roles in October. These figures were up 6% when compared to the same period in 2019.

The report went on to reveal that the amount invested in attracting these individuals has increased at a much higher rate than demand. In October 2022, staffing firms showed a 7% increase in contract revenue, compared to September. Annual comparisons showed a 14% increase in October.

The greatest increase was seen in pre-covid levels. Sales are up 48% since October 2019. With contractor costs inflated above the rates of demand, all indications are that the costs of employing contractors are increasing due to individuals being able to command higher rates in a tough skills climate.

Ann Swain, CEO of APSCo, commented: “The contract labour market has been heavily relied on as skills shortages remain rife. With talent in increasingly short supply since Brexit and Covid, temporary staff have been hugely valuable in filling gaps. However, what we’re also seeing is a further reliance on these individuals in an uncertain market where fewer businesses are confident in committing to permanent increases in headcount. The spike in contract sales revenue does show the level of fees contractors are able to command in such a skills short market. While we fully expect rates to increase in a cost-of-living crisis, the pre-Covid comparisons show a significant increase which is being driven by more than just the economic climate.”

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Chancellor lights a match under Mini Budget effectively ending IR35 review

Decision damages the flexibility of the UK labour market

Yesterday, the newly appointed Chancellor, Jeremy Hunt, upended much of the Mini Budget that his predecessor, Kwasi Kwarteng delivered less than a month ago. Hunt announced that he would scrap a planned repeal of the IR35 reforms (off-payroll) which came into effect in April 2021.

In the Mini Budget speech titled ‘The Growth Plan 2022’ that was given in September, Kwarteng delivered on Prime Minister Liz Truss’s promise to review IR35 legislation.

Understandably, this has caused frustration in the off-payroll community following hope of the repeal of legislation that added unnecessary complexities to the contractor workforce and organisations.

Clarke Bowles, Chief Revenue Office at My Digital spoke exclusively to TALiNT International:

“The new Chancellor, Jeremy Hunt has effectively lit a match under the Mini Budget, as a result the off-payroll working rules will remain in place for both the public and private sectors creating a multiverse style glimpse into what could have been. The repeal of the repeal effectively means business as usual as it has been since 2017 for the public sector and 2020 for the private sector whereby the end client has the responsibility to assess and then pass down an SDS (Status Determination Statement) and the fee payer carries the majority of liabilities. Cancelling the Off-Payroll Working Rules repeal seems, dare I say it, like a ‘blanket approach’ to all of Kwasi’s Mini Budget points and this one in particular won’t help the growth of the economy which relies heavily on flexible workers in the UK labour market, the repeal had the potential to serve as a catalyst to economic growth it’s unfortunate that we came so close to this being a reality but are unfortunately left with a piece of legislation which was never really fit for purpose. Whilst IR35 is incredibly complex I will continue to advise that accurate and fair assessments are and always have been the way forward, ensuring those who are genuinely outside of IR35 can continue to work in that manner.”

IR35 specialist, Qdos, also responded to the news. Qdos CEO, Seb Maley, said: “I’m lost for words. The chaos, uncertainty and disruption caused by the mini-Budget is unprecedented. While U-turning on some tax cuts made sense, cancelling the repeal of IR35 reform is the wrong decision at the wrong time. It’s a knee-jerk reaction from the government and, in my opinion, won’t benefit the economy. IR35 reform damages the flexibility of the UK labour market, which is key to economic growth. Many contractors left the sector after risk-averse businesses stopped engaging them. Repealing reform would have opened the floodgates – a catalyst for the recovery of this sector.

“With IR35 reform now remaining in play, businesses must continue prioritising compliance. The legislation is complex and navigating it can be a challenge, but with the right approach can, in fact, be managed.”

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Labor Department moves ahead with independent contractor rule

Will this mean that more gig workers will be considered employees?

The US Department of Labor will be moving forward with a new rule aimed at determining who is an employee and who is an independent contractor with the department announced today that it will publish a notice of proposed rulemaking on Thursday.

Its new rule will likely require more workers — including gig economy drivers — to be classified as employees rather than independent contractors, The New York Times reported.

Marty Walsh, Secretary of Labor commented: “While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers. Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.”

Specifically, the proposed rule would:

  • Align the department’s approach with courts’ Fair Labor Standards Act interpretation and the economic reality test.
  • Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA.
  • Ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors.
  • Revert to the longstanding interpretation of the economic reality factors. These factors include the investment, control and opportunity for profit or loss factors. The integral factor, which considers whether the work is integral to the employer’s business, is also included.
  • Assist with the proper classification of employees and independent contractors under the FLSA.
  • Rescind the Trump era 2021 independent contractor rule.

The current Trump-era independent contractor final rule was set to go into effect in March 2021 but was initially delayed by the incoming Biden administration and was withdrawn by the Department of Labor in May 2021. However, a federal court held the withdrawal was unlawful, and the rule remains in place.

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Liz Truss follows through on promise to reform IR35

Contractors will once again be responsible for determining their employment status

Big news came for the contractor workforce last week when Chancellor Kwasi Kwarteng used the mini-Budget 2022 to repeal IR35 reform in both the public and private sectors, stunning and delighting the contractor sector in equal measure.

Mr Kwarteng said IR35 reform had imposed “unnecessary cost and complexity” for “many businesses,” so it will be repealed, “as promised by Prime Minister, Liz Truss.

In fact, during her campaign, Liz Truss only promised that the off-payroll rules would be reviewed, however that’s not stopping the contractor sector celebrating that all IR35 status decisions will be reverting to them from April 2023.

At chapter 3.44 of Mr Kwarteng’s Growth Plan, the government states: “From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status.

“And [they will be responsible for] paying the appropriate amount tax and National Insurance contributions.

“This will free up time and money for businesses that engage contractors, that could be put towards other priorities.”

Matt Fryer, Managing Director at Brookson Group, a People2.0 company, commented on what this means for recruiters. He said: “The U-turn will be welcomed by recruiters as it removes a significant compliance risk form their business and their clients. This should help to unlock the potential of flexible workforces at a time of increasing demand for highly skilled temporary workers, particularly in industries such as IT, engineering and energy. It does not, however, remove all compliance risk from resourcing contingent workers.”

Neil Carberry, CEO at REC also commented: “It is not enough to simply tear things down though – we also need to build. On IR35, retained European regulation, investment zones and infrastructure there is hard work to do on replacement rules, and in some cases little time to do it. Business is ready to help – but we will need action from Government to make things happen. Nowhere is this truer than on skills, where the failure to reform the failed Apprenticeship Levy continues to hold back employer training investment. Reforming the Working Time Directive allows us the opportunity to preserve rights on holidays, breaks and working weeks while removing the administrative nightmare faced by firms in calculating how they comply with the current rules, which were not designed for today’s economy. But we need to move quickly to do this, given the chaos that has been created by some recent court judgements.

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Opportunities for assignments with Ministry of Defence

Flexible Healthcare Resourcing platform is a first for MoD

A new digital Staff Bank has been rolled out for the Ministry of Defence, allowing compliant, flexible workers priority access to assignments across the UK and abroad as they become available.

The platform was launched by HCRG (Health Care Resourcing Group) and designed in collaboration with healthcare staffing specialists Patchwork Health.

The platform will be used to assign temporary doctors, nurses, dental professionals, and allied health professionals. The assigned flexible workers will support the permanent military and civilian workforce in the provision of primary, as well as secondary, healthcare, and dental and mental health services.

Assignments will be available in UK and Overseas tri-service military locations, offering a unique opportunity for healthcare professionals to practice their skill base in various primary and secondary healthcare, dental and mental health service settings.

Healthtech company Patchwork holds various collaborative banks for NHS Trusts throughout the UK. Their technology will allow members of the Staff Bank to accept assignments through an app designed by and for healthcare professionals. The app is created to provide a more efficient assignment process and ensure every flexible worker is fully compliant.

The Staff Bank welcomes applications from all healthcare professionals, including those with previous locum or permanent MoD experience, but current permanent MOD Military and MOD Civil Servants cannot join the platform.

Gezz van Zwanenberg, COO at HCRG, said: “Our teams have worked previously as master vendor supplier of healthcare staff to the MOD for a number of years historically, so it’s an honour for HCRG to have now been chosen to provide the organisation with their flexible healthcare resource.”

Dr Anas Nader, CEO and co-founder of Patchwork Health, commented: “Digital staff banks are the future of temporary healthcare provision. They offer a dynamic, reliable and safe way of ensuring healthcare settings have the clinicians they need, when they need them. Crucially, this system not only drives up safe worker levels, but also makes the experience better for the individual worker, meaning the entire system benefits. We’re delighted to be partnering with HCRG to deliver this critical project to the MOD.”

Russell Pidducci, Account Director at HCRG, commented: “This new Staff Bank offers flexible opportunities that will interest a wide range of healthcare professionals. The technology makes it incredibly easy to view and book assignments, ranging from single day opportunities to longer term assignments lasting a few months. Whereas previously healthcare professionals may have been waiting on the call from locum agencies, we’re now providing instant, priority access to assignments as they go live via the app, allowing for professionals to self-book assignments 24/7.”

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Freelancers face delays as businesses battle cashflow

Late payments from suppliers and payroll system issues cited as reasons for delays

Despite contract work being on the rise since the pandemic, freelancers often wait three times longer to get paid than full-time staff who earn a monthly salary. Research shows that this is due to firms struggling with cash flow and payroll issues.

The survey, conducted by embedded finance and payment solutions provider, Sonovate, showed that 53% of all small and medium-sized businesses (SMEs) use contractors. However, this number increased to 81% when looking only at medium-sized businesses.

More than a quarter (27%) of SMEs said it takes them over 90 days to pay their contract staff. This figure increases to 37% among medium-sized businesses (50 to 249 employees), even though they are expected to have more predictable cash flow and should be able to make more timeous payments.

Five hundred senior business decision makers were surveyed, and it was discovered that 28% cited cash flow as one of the main reasons for slow payments (rising to 33% among mid-sized enterprises). It was also found that 62% believed that these cashflow issues were caused by the knock-on effect of late payments from their suppliers and customers. Twenty-eight percent said that issues with payroll systems stopped them from paying contract workers on time.

Regardless of the clear need for good contractors, 39% agreed that failure to pay timeously might result in missing out on quality talent. A further 24% admitted they had lost contract workers as they couldn’t pay them on time.

Richard Prime, co-founder and co-CEO at Sonovate, said: “Despite the last few years accelerating the number of workers going freelance or contracting, they are consistently being paid late which is not sustainable for many people –  particularly at the moment.”

“We know that contract workers are the future of the UK’s workforce, but with the cost-of-living crisis front of mind, 90 days is just absurdly long to wait for payment. Against the backdrop of this crisis, it is paramount that businesses have access to solutions that support them to offer fairer and swifter payment across the workforce supply chain.”

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Recession fears a reality as the labour market struggle continues

Data reveals a slowdown in hiring in May and June

A recession may become a reality sooner than expected, suggests new data from the Association of Professional Staffing Companies (APSCo). The research reveals difficulties in the UK’s labour market.

Traditionally, June showed a recruitment spike ahead of seasonal drops in July and August. This year, however, although numbers improved slightly in May, the latest research showed a slowdown in hiring between May and June, suggesting further drops in the summer months.

APSCo’s June research suggests that the economy is feeling the effects of Government uncertainty, a cost-of-living crisis, and substantial skills shortages.

According to the report, the number of permanent vacancies added dropped by 12% month-on-month in June, and the number of contract positions fell 11% year-on-year. It appears that permanent roles are on a downhill trajectory, down -2% between June 2021 and June 2022. Contract roles, however, increased 5% in this period.

Compared to pre-pandemic data, the number of permanent jobs being created dropped by 9% between June 2019 and June 2022, suggesting that the stability of the country’s hiring market and the economy is taking strain.

The report also revealed that placements dropped month-on-month for contract (-9%) and permanent roles (-7%). In terms of permanent salaries, the report showed a 2% increase month-on-month, but -3% decline, year-on-year.

Ann Swain, CEO of APSCo, comments: “A slowdown in hiring following the post-pandemic boom was to be expected, but in the current market and with talks of a potential recession in the pipeline, this decline is of concern. The UK’s post-COVID economy has been hit with employment strikes, skills shortages, Government uncertainty and a cost-of-living crisis. With controversial changes to rules around using agency workers during strikes voted in and the country facing continued uncertainty alongside Governmental leadership changes, employers and the recruitment sector have been hit hard. Stability is crucial as we continue to navigate such an ambiguous market. As the trade body for the professional recruitment sector, we believe that there is more to be done to make the UK’s employment sector competitive on a global scale. With recruitment activity slowing, we could be at a tipping point that sets the country on a downward trajectory unless swift action is taken.”

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