Is there a SOW light at the end of the tunnel?
Is contracting dead?...
Or is there a SOW light at the end of the tunnel?
These are certainly challenging times for the employment market. A recession, Brexit, a pandemic, and the IR35 reforms (off-payroll) have made many rethink their futures.
We recently spoke about individuals choosing to explore freelancing or consultancy work as a way to improve their quality of life. But equally, with a 6% increase in the Corporation Tax rate, even with small profits rate and marginal relief, it’s easy to see why so many contractors are choosing permanent employment.
The government position
For years it would appear the UK government has been waging war on contractors with an ever widening set of legislative measures.
IR35 reform for both the public and private sector has and will bring with it an increase in investigations from HMRC, the likes of which we continue to see in the media with overinflated claims of tax at stake from an HMRC press office in overdrive.
The fall-out of the reforms is not yet entirely clear however one thing is certain. Projects still need to be done. Employee headcounts are not unlimited. There is still a huge demand for temporary work requiring specialist expertise on a short term basis.
While HMRC have provided some guidance on what constitutes a genuine contracted-out service, end clients must have processes in place to ensure that not only the contractual arrangements, but the working practices, reflect a truly outsourced service.
Are there any traditional contractors left?
Since the implementation of off-payroll, many end clients are more averse to risk than ever.
Additionally, many have taken the position that all contractors must be assessed as inside IR35 or even gone as far as blanket banning them altogether.
It has now been nearly two years since off-payroll was implemented in the private sector in the UK and how are contractors and businesses adapting? There are very few outside IR35 roles on the market so where has everyone gone? Surely not all former contractors have been lured into the end client’s organisation as employees with lucrative packages and share options? And surely not all contractors have taken a 25% pay decreases as inside IR35 umbrella workers?
So, what's a SOW?
Contents
Explore more of this series
- Part 1. Is there a SOW light at the end of the tunnel?
- Part 2. When a new model isn't new at all
- Part 3. What exactly is a SOW in legal terms?
- Part 4. How can this model benefit you if you are an agency?
- Part 5. What are the advantages of this model to end clients/customers?
- Part 6. What is a genuine outsourced service?
- Part 7. Why end clients need to conduct a SOW risk assessment
Carla Roberts
About the author
The team is headed by Carla Roberts, a dual-qualified (US/ UK) lawyer. who has over 14 years of experience advising the staffing/recruitment industry. Carla was previously Head of Legal for a large recruitment company and also worked as Sr. Legal Counsel for Alexander Mann Solutions. Her career has included another 10 years working in a compliance managerial roles for large insurance companies.
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