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Staffing body calls for IR35 changes to address skills shortages 

APSCo puts IR35 in its crosshairs and calls for umbrella industry regulation

The Association of Professional Staffing Companies (APSCo) – the trade body for the professional recruitment industry – is calling on the government to solve the UK skills shortage.

It has put forward a three-point plan and wants the government to “address urgently” the problems of IR35 legislation and non-compliant umbrella companies, which it considers to be significant barriers to a productive economy. 

APSCo was launched in response to the planned introduction of IR35, initially as the Association of Technology Staffing Companies (atsco). In 2009, it became APSCo and started representing the interests of professional recruiters. 

Since then, it has lobbied the government and provided businesses across the professional recruitment sector with information, guidance and support. 

It’s also a founding member of the Employment Status and Intermediaries Forum, which regularly meets with HMRC to discuss employment status policies and legislation, and improvements to the off-payroll working rules.

As such, the body is a leading voice on a range of issues affecting contractors and the self-employed. Its latest announcement points to three areas where government action and regulation are needed.


Introducing a legal definition of self-employment

APSCo’s first call is for the government to introduce a legal definition of self-employment, which would give self-employed workers greater legal protections and entitlements.

This could see contractors protected from zero-rights employment – a situation that occurs when contractors are engaged inside IR35, meaning they pay employment tax but do not receive employment rights in return.

According to APSCo, it would “resolve the complexity of status determinations for tax and rights”, preventing contractors from zero-rights employment, while helping to “reduce complexity at the professional end of the contracting market”.


A proper approach to umbrella regulation

The body also wants “more rigorous regulation on the umbrella market” to protect contractors from tax avoidance schemes.

APSCo notes that “nuances in how these businesses are defined and operate” are “exacerbating the complexities of the labour market and providing opportunities for unscrupulous firms to operate”. 

The government has promised to deliver the Single Enforcement Body (SEB) via legislation “when parliamentary time allows”. However, APSCo expects the government to “be ambitious and futureproof the legislation, considering licensing of the umbrella market” and “the introduction of statutory compliance codes”.

APSCo also wants to see the government “tackling rogue umbrellas… with a bigger budget to ensure the recruitment landscape is fair and works for all”.


Rolling reviews of off-payroll rules

The body has stated that it is “aware of the limitations” of IR35, and wants to see the government commit to “constant reviews of the legislation to enable a flexible, agile and independent professional workforce”.

This includes fairer processes for employment status determinations and decisions, helping contractors and businesses to “overcome” the challenges and “current burdens” of the off-payroll working rules.


“Reform is needed urgently”

Tania Bowers, Global Public Policy Director at APSCo, said that the plan was launched because “the way we live and work has evolved significantly since the pandemic”.

“Employment legislation needs to both catch up with the modern, more flexible environment that we now operate in, and be able to adapt to constant change as and when it happens”, Bowers explained.

“With the government no longer proceeding with an overarching Employment Bill, reform is needed urgently in three core areas if the UK’s labour market is to be strengthened in what is increasingly becoming a difficult year”, she added.

However, Bowers also noted that, while these should be “the priority areas of focus”, the government’s abandonment of the Employment Bill will lead to policy blindspots.

“We remain concerned that without one holistic Employment Bill, there may be areas of employment law that require reform which are missed”, she said.

As such, Bowers is calling on the government to deliver the three points that APSCo has outlined, as well as “a more joined-up approach… to ensure legislation continues to work well for, and protects employees, businesses and recruiters”.

Doing so would help to make the UK labour market “as strong, dynamic and fair as possible”, Bowers concluded.

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