It was no surprise that the Chancellor of the Exchequer confirmed in the October 2018 Budget that the government will indeed reform the off-payroll working rules (IR35) in the private sector.

Fortunately, employers have breathed a sigh of relief as the changes won’t happen until April 2020. What’s more, the Chancellor also announced a number of concessions, such as small private sector employers being exempt from these rules. This is welcomed to reduce the burden on those  employers. Over the coming months, there will be further consultation, some new guidance, and the online employment status tool (CEST) will be updated.

Where does that leave employers today? Whilst April 2020 feels a long way off, it is already nearly a year since the Chancellor made his announcement. Before we know it, we will be into the new year, therefore, it is vitally important that employers start to prepare now – and use this time effectively.

The new rules place some important responsibilities on employers – particularly that the responsibility for applying the off-payroll rules will move from the contractor to the end-client organisation. And, where an individual is ‘inside’ the rules, it will be the responsibility of the ‘fee payer’ to make the appropriate deductions as required by HMRC, such as income tax, employer and employee NIC and the apprenticeship levy.

What should employers do? Now is most definitely the time to start planning. We’re already looking at the impact on our own organisation and are talking with many clients who will be impacted. As part of the planning process, there are many things that employers could be doing, but the following are some of the minimum steps that, we believe, should be taken.

1. Set up a working group: Pull together the right stakeholders within your organisation who may have an interest in the new IR35 rules – HR, legal, payroll, IT and recruitment partners. Who needs to know about this and what do they need to do in order to support it?
2. Identify who is at risk: You need to understand the extent of the issue you are facing. How many contractors are in scope? How do you track who and where they are? How critical are they to your operation?
3. Review your systems: Are your IT and payroll systems up-to-speed and able to cope with the change? What controls do you put in place to make a determination about their status?
4. Seek advice: It is so important to understand the rules. Work with your advisers and recruitment partners to be better informed.
5. Review employment models: Understand the different models you could use. Is it about moving contractors to PAYE, using Statements of Work or an Employed Consultant (EC) model? What will be your strategy to hold onto key talent?
6. Communicate: Make sure you engage your internal audiences as well as the contractors. More people will become aware of the pending changes over the coming months and they will all have questions.

All employers should start planning and understanding what the impact is to their business and supply chain, and where the risks could lie. Next steps to take include:

• Review all contractors that are contracted (or likely to be) beyond April 2020.
• Create an IR35 steering group to review all potential cases.
• Categorise each contractor who would be deemed a risk.
• Liaise with your Managed Service Programme (MSP) supplier and contractors to discuss your approach.

To help organisations mitigate some of the risks and optimise their use of talent in the long term, one of the alternative workforce models we offer are Employed Consultants (EC). As payrolled employees (employed permanently by an external agency), ECs are already outside the scope of the new legislation and, therefore, represent a steady investment for any project – as well as cost savings and flexibility. ECs can either replace an existing contingent workforce, or an organisation’s existing contractors may consider becoming ECs.

While there is much to do, the sooner organisations start, the more straightforward this will be. Don’t feel you need to have all the answers or do this all yourself. Include your advisers and partners in your planning.

We are committed to helping smooth the process as companies prepare for the upcoming IR35 changes and are working closely with our clients to understand the most effective ways we can support them.This article first appeared in the tenth edition of The Human Age Newspaper.