I are 35.

Maya Matlin signed, the director of Public Service is and I'll be introducing a leading the weapon are today.

But I'm also joined by client Mills has very kindly agreed to join us to case study his experience of implementation of i R 35 across transport for London.

Clive is the recruitment and redeployment manager and fundamentally let the implementation off the reform across his organization.

And I'm joined by Steve Wits, who is the hate group head of tax and treasury that did a lot of work in the early days of the reform, in understanding the implications of reform and spent a lot of time with our customers in working together.

You understand how to implement the approach so moving on to the agenda.

What are we going to cover?

The initial element will be around the recap of the I 35 reform itself.

What changed Andi?

How that Steve will walk us through well then touch on the market reaction as to how the different sectors of the market but the customers, the contractors and Also, agencies responded to the changes.

And then client will walk us through how he set about organizing his organization around the implementation of the reform and then Steve or touched on where we now post the autumn budget, the implications of the private sector consultation and what that means for us as public sector hiring on.

Then finally, I will walk through competing for talent.

Best practice approaches.

The one of Clive and others learned about how to implement.

I'll fight reform in order to be able to continue to access that hard to find skills scarce.

What happened?

So meeting on?

So it was Steve.

Let's have a recap, please.

If you weren't around the reform and how it was intimate Thank you.

Hi.

Everyone mostly on the core will have already been dealing with the legislation that wild.

So I will only briefly recap the key roles that were introduced back in April 2017.

So fundament in the woods applied principally to personal service companies working in the public sector.

Question, I guess what constitutes public sector?

On the on the answer to that bean, all those parties who are subject to the freedom of Information Act.

A decision needs to be taken by the public sector authority as to whether a contractor is inside or outside our 35.

They didn't need to notify that decision to the relevant person.

The relevant person being principally the contract isn't involved.

They could be asked by that contract why they reached that decision on dhe.

The engaging body needs to reply within 31 days.

Otherwise they become responsible for the operation of P A Y E if that PSC contractor for inside are 35.

So I notice that everyone there, I guess it's that man is your risk by ensuring that any concerns that personal service worker has questions that they have for you need to be dealt with swiftly and responsibly.

It's the work force inside are 35 then the organization paying contractor, and they can often be recruited or umbrellas need to account for P A, y e N i C.

UN employers and I see as well as now recently apprenticeship levy.

If the work force outside our 35 then as previously that could be paid gross, there's online tools provided by HMRC aimed at aiding the decision making protests.

Sadly, it took a long time to actually created went through very situations on DDE.

In my opinion and the opinion of the fashions, that's professionals.

Generally, it remains a very blunt instrument to truly identify with any sophisticated degree of accuracy who falls inside and outside.

The second problem, I guess, about the Marciano and two and it's partly a ah problem created by HMRC is that lots of engages rigidly adhere to what they think is an absolute need to use that online tool when actually, there are many of their ways of reaching the decision is the weather contracted balls inside outside on the H multi tool is just one way of doing that.

Finally, the PSC work force inside are 35.

Then he or she needs to be reported on your usual p a y V tunes.

But again, the organization that General Page will be doing that for you.

So that was a brief recap of some of the key issues that engages general face when looking at the new rules.

So what happened in the highly market since the introduction of the rules?

Well, firstly, some some organizations simply stopped hiding PSC workers altogether on the basis that it was just too big a hassle.

Some of them continue to hire PSC workers, but insisted on the operation of P A.

Y you by come on in scope, blanket determination, which is a quick and simple.

But there's often easy wailed on bled the problems with contracted it themselves.

Some applied the laws in testing the PSC workers on assignment by a flaming basis, either via the musty online testing to allow backstage with her parties that there are a number of food parties out there who are specialists in this field.

Um, and you imagine, if this is all you do, the sophistication involved in running these tests is, in my view, significantly enhanced well above each marcie on line two.

Finally, many actually refined and optimized.

That approach appeared in time.

Ultimately, after starting a position one or two finally falling on three, where they started critically evaluating each the workers on DDE what status they had as to whether they were inside or outside after the fight.

Thanks.

So what happened elsewhere across the market, in particular cost recruitment agencies and contract as well, Still, some nine months on many organizations in terms of recruiters struggle with the nuances in the detail of the rules on media often ignore them to some extent.

So if you look at the example some particular sectors in the marketplace I'm thinking, for example, nursing in the N.

H.

S.

There are still some organizations that either choose to ignore the rules or indeed willfully test them to the extreme with, as we put here, often inconceivable outcomes on what we're finding is that there are some organizations that have sprung up that are making determinations on behalf or customers on paying individuals growth, which is ultimately putting the hiring management community, the end user customers at risk.

So there are some issues out there that need to be.

You need to be aware off somebody.

However, there are others that choose to work closely with their customers and working with them hand in hand in support of the rules, making sure that customers can indeed comply with the reform and the tax law as set out by HMRC achieving the intended outcomes across the different work of populations in terms of PFC workers and beyond.

What about contract as well as you'd expect contractors continue to look to have their status properly tested in order to potentially establish themselves.

Outside of I 35 where appropriate.

So many contractors, many PFC.

Operating in the manner in which they provide their surfaces where they expect to be treated as I 35 because they comply with the tax law on.

Therefore, they expect their hiring managers, their organizations that utilize their service is to treat them in that fashion in order to be able to continue to provide their service is in that manner as such.

Also, during the time pigmentation around April last year, many contractors look to set out how to improve their working practices so that they can actually define themselves more clearly as contractors and therefore more likely to be deemed to be out a scope of 5 35 What we obviously found.

That is where blanket in skirt determinations were granted.

Many individuals, many contractors, many providers chose to work only with those public bodies that actually offer a testing regime.

I, on an assignment by Simon basis on where organizations didn't offer that they moved wholesale across into the private sector, where in the face of very robust demand.

Highly skilled contractors they're in high demonically can choose where to fight that trait on often move across to the private set in the face of those blanket in scope determinations, and client will touch on that as we go through his case study.

Others obtained a rate increase to compensate for the net pay reduction.

So if there was a blankie in scope, determination instigated, obviously it has a significant impact on the take home pay off these providers, these contractors and therefore they sort compensation for them.

Some, on the other hand, accepted the tax deductions or indeed were converted to employees.

Now this is a question of where you look in terms of the skill set.

So those that traditionally operating the highly specialised marketplace and provide the service is as contractors were able to move to the private sector but those where they were limited in their choices.

So, for example, nurses and we're required to take those tax deductions on the chin on operate, either in a p a way basis or or pay the tax and I three different means.

Others simply left the market altogether because it just became not worth it anymore on where they were fed up with being treated indifferently in terms of having arbitrary in scope determinations made on their behalf without consideration around the truth, through status off the assignments, as I mentioned earlier, some some work through potentially illegal solutions such as nurses, which will in the face of HMRC scrutiny on proved to be problematic for the sector, both reputation and also financially.

As a result of all of these things, it's become much harder to attract skill talent to work in the public sector.

It's in terms of demand.

At the moment there are there is the lowest unemployment since 1975.

Demand is reversed across both private and public sectors as all organizations seek to transform and change how they did.

How they deliver their service is on that basis has become much harder for the public sector to attract skilled tanner in the face of this demand.

So what have been some of the outputs around the implementation of I R 35 revolt Reform.

This is a the outcomes the results of a survey carried out by contracted calculator.

Now we must point out that it is certain survey across contractors who clearly have a position to present.

But it is interesting in its insights in terms of some of the scale of the impact.

So, for example, 76% of departments lost highly skilled contractors.

71% of projects were canceled or delayed as a result of losing those contractors.

And again, client will have some views on this.

47% of pork projects lost at least 1/4 of their contractors on.

Indeed, as I mentioned earlier, 27% of public sector contractors actually left the public sector and moved across to the private sector in the face of robust demand.

But people have the luxury of choices about where they work in this current marketplace, so you could see there was a significant impact as a result from the contractor.

Point of view on this indeed was backed by our own survey across our customers that we carried out without salary serving, where 78% off our customers found it harder to attract skilled, temporary or contract workers as a result of the implementation of the reform, and in the 25% of those found it much harder to attract the staff they need.

So there's clear evidence on both sides of the fence, but from contractors, but also across our customer community about how this reform has affected the ability to attract skills into the public sector.

One of the others also is nearly 1/4.

23% of contractors now demand a higher rate from employers from public sector hiring organizations as a result of the changes in the reforms in the implementation of these reforms, so bottom line is resulted in increased costs, much more difficult, hiring conditions and increased risks and successful delivery of objectives across the public sector.

Organizations hiring specials, contracted workforces.

Now hand over to Clive is gonna talk us through how, he said about implementing the reforms into his organization.

Get off me now, Clive Mills and on the criminal redeployment manager at TfL and it's Bean really the biggest project that I've managed it on.

At the beginning of the Aisle 35 legislation, I thought he could possibly be interested in tax.

Surely this is a very dull topic, but actually it's Bean a really interesting project that we've run on a really fun project to get the team involved with But like Thio, just tell you a little bit of AP TfL.

We have with the third largest employer in London on we've got 27,000 employees.

A few few key points that do you understand the stations just get down to the bottom.

We had 3200 temporary workers in December 2015 on that's come right down to 15 hundreds.

A huge reduction.

I'll 35 certainly played a part in that, but we'll get through.

Also, our transformation program and head count reduction program has also played a part.

Um, we had 1672 he had seen before.

I are 35 Cut in on dhe.

We think we have something between two and 4000.

Statement of work, um, workers by framework agreements.

But of course, we hire people on the framework agreements rather than individually.

So we were never too sure.

Um, about that number leaving home wanted t shed timeline off the off the project.

And I think one of the things that we benefited from was early on having a steering group in place with senior leaders on it from So we had a head of direct attacks on Dhe, our principal lawyer as well as myself.

And commercially, it helps to have that steering group in place early because we had questions fielded we could field from directors from Why request that we will I have to address.

So that was early in 2016.

Then we responded Thio consultation on talked hmrc about the impact of influence in this And I guess the dangers of a two tier workforce where we would have a more difficulty recruiting from the balky rose because of the bleed, the private sector.

And then we moved on Thio.

I'm gonna jump through Thio October November where we we did analyze our roles.

So that was another key step for us if we got on site.

How many of these rolls of business?

Critical.

We had the autumn statement.

The announcement by the Chancellor in November and then really, the main work happened between November and January that we had about four months.

Remember January and then three trick or all in all, about four months to implement site.

I'm the journey that we undertook at the beginning.

We were we were thinking about everyone being inside.

I think that's that's being a common theme in the public sector and certainly the chest that approach early on, everyone should be inside.

Surely that minimizes the tax with So we we thought about that for a number of reasons.

But I think over the Christmas period as a steering group, we we thought, Hang on.

We've got truth contractors working particular in the I T department and our white color engineering workers.

Is that really the right thing to do?

And so we we formulated the more blended approach that was part of our journey that was an important part of our journeys.

Is looking at our workforce.

Um, then we the second point, if we can just get back to that That's like we looked the I T department work particularly worried about losing t talent over to the private sector over to Canary warf.

And so we we need to be engaged with them.

We had early engagement with Hayes Hayes, our MSP on DDE.

Having them on site in parting with them was very helpful when they helped a lot with the data on the thinking.

With this Well, I think we've taught matters talked about the HMRC tool it was being blunt toward.

It was a basic tool at that time.

It certainly moved on now, but we looked at whether we could be more comprehensive testing ever more comprehensive tool, which we did.