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The UK budget announcement from Chancellor Rachel Reeves has introduced several policy changes that will impact large enterprises in the UK, especially those managing large workforces, complex hiring strategies, and contingent workforce solutions. As businesses adjust to these changes, understanding their implications on full-time hiring, contractor compliance, and umbrella company regulations will be crucial. Below, we break down three essential areas of the budget and what they mean for your organisation:
One of the headline items from this year’s budget is the increase in National Insurance (NI) contributions for employers. This adjustment, designed to boost tax revenue, also raises the cost of full-time hiring across all sectors. For large enterprises, this change has several important implications:
Strategic Takeaway: Evaluate your workforce composition carefully. Consider increasing reliance on project-based contractors or freelance talent to balance budget constraints without compromising on capacity. Leveraging contract roles where full-time hires might be too costly can help ensure your workforce remains agile in response to changing demands.
Many businesses were hoping for a repeal or at least a reform of the existing IR35 regulations, but the government has chosen to keep these in place. Under IR35, businesses bear the responsibility of assessing the tax status of contractors, potentially exposing them to significant penalties if a contractor is incorrectly classified as outside IR35. Without reform, enterprises must continue to navigate IR35’s complexities, particularly in how they structure contract roles.
The safest route to remaining compliant with IR35 requirements is to adopt outcome-based Statements of Work (SoW). Here’s why:
Strategic Takeaway: Consider adopting outcome-based SoWs for contract engagements as part of your compliance strategy. This approach allows your business to access critical talent while staying within legal boundaries and reducing the risk of costly compliance errors.
The budget has also introduced new legislation around umbrella companies, which serve as intermediaries for payroll management of contractors. While umbrella companies can provide efficient solutions for paying contractors, they come with compliance risks if not properly managed. This new legislation seeks to tighten regulations, making it imperative for enterprises to work only with fully compliant umbrella providers.
Strategic Takeaway: Now more than ever, it is crucial to vet umbrella companies thoroughly before engaging them. Partnering with a compliant, reputable umbrella company reduces risk and ensures that your business remains aligned with the latest regulatory standards. We expect again to see a rise in Outcome-Based SOW projects where umbrella companies are not part of the supply chain.
The 2024 UK budget has presented significant challenges for large enterprises navigating an already complex employment landscape. With the increase in NI contributions, lack of IR35 reform, and new umbrella company regulations, businesses face a unique combination of compliance and cost management challenges. By re-evaluating full-time hiring strategies, adopting outcome-based SoWs, and ensuring partnerships with compliant umbrella companies, large enterprises can mitigate risks and adapt to these changes effectively.
Gigged.AI provides powerful solutions to help enterprises manage workforce challenges in this new environment. Our Internal Talent Marketplace enables organisations to make the most of existing employee skills, especially when hiring freezes are in place, by matching internal talent to critical projects and roles. Additionally, our Open Talent Marketplace offers outcome-based SoW engagements, ensuring compliance with IR35 while excluding umbrella companies from the supply chain. This approach allows you to stay agile, access top talent, and remain compliant, all while navigating today’s complex regulatory landscape.
Let Gigged.AI help your business stay competitive and compliant in 2024 and beyond.
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