05-11-19
Industry Analysis

Autumn Update – permanent trends and IR35 changes

Written By
Andy Bristow

Welcome to our autumn update and let's start with the good news that demand remains very high across the East of England for IT skills, IT is a full employment sector right now and individuals skilled in PHP web development, C#, Python, SQL and AWS are particularly coveted by employers. This may not feel like particularly good news if you are one of the many people trying to hire these skills but the bigger picture is that the demand is being driven by a commercial sector with strong project pipelines suggesting that the underlying regional IT sector is in good health.

There have been a few instances of businesses making redundancies but having been involved with helping several of the IT staff affected find new roles I believe that the issues are company and industry specific rather than a precursor to any future malaise in the sector.

One of the side effects of the full employment environment is that candidates with desireable technical skills can be as discerning as they wish when appraising potential new employers, all the factors surrounding a job come into play when weighing up options with, for example, factors such as the availability or cost of parking being the difference between a hire being made or not.

And why not - if you have a skill set that is in demand why wouldn't you look for a role that ticks all the boxes? The main boxes being (in no particular order); a salary at or above market rate, a straightforward commute, decent holiday allowance, flexible working, challenging and enriching work, strong and inspiring management with a clear strategic direction, a motivated and engaged team to work with and decent working environment that employees can be proud of. These have become basic requirements and even businesses with all this in place will still need a good working relationship with a recruiter who can deliver the talent needed to grow their business.

For candidates the recruiter relationship is equally important in these times, you can't attend a hundred interviews so someone needs to give you the insights needed to narrow down the field and select potential employers that it is worth going to see. This may sound like us talking up recruitment agents role and that's exactly what it is but with good reason, we see value being added to the process every day and how tough it is to succeed in hiring without the right advice and approach.

Impact of Brexit and the coming Election
Despite the positivity surrounding the technical sector there is no doubt that the overall sentiment in the country is having an effect on the employment market with a "better the devil you know" attitude common amongst candidates. This isn't ideal for anyone and a functioning employment market is a key contributor to economic growth - so add this to the list of reasons to hope for a resolution to Brexit one way or another soon.

CONTRACT OUTLOOK AND IR35 CHANGES

If there's never been a better time to be a tech permie, there will be many contractors lamenting the forthcoming changes to IR35 and there is a certain irony that the most buoyant contract market in years could be about to be shaken up significantly from April 2020.

After April 2020 any medium to large business using contractors must determine the IR35 status of these workers and crucially, will be held liable for any mistakes and responsible for paying the shortfall in tax. There is a large amount opinion and discussion available on the internet so I'll focus my comment on the likely effect of the changes on the market:

- Many contractors will choose to close their limited company and become permanent employees
- Contracts with "small businesses" will become highly desirable to contractors, potentially having a deflationary effect of rates
- Contractors that don't go perm may switch to running under an umbrella company, using their limited company only in the event of an engagement with a "small business"

There is a slim chance that an incoming Government could abandon the implementation of the changes but beyond the contractor message boards there hasn't been a huge amount of sympathy on offer, the perception being that rates are already high and applying IR35 is the correct thing to do in many cases. This view neglects the temporary and insecure nature of the work contractors do and having easily accessible skills is an important aspect of the employment market.

For experienced contractors able to command high rates it is still just about worth remaining as a PSC, especially if you value the freedom that contracting offers, so contractors should keep a close eye on developments and make sure you understand your options.