Hiring temporary contractors – understanding tax rules IR35
Are you aware of the recent change in law regarding temporary contractors? Here the team at Lawspeed, the UK’s leading Law Consultancy dedicated to the recruitment industry, discuss the new tax rules… Some of you will have heard recently about new tax rules known as IR35 relating to the use of temporary contractors, and due to apply in April 2020. Under current proposals businesses with a turnover of less than £10m, a balance sheet of £5m or fewer than 50 employees (excluded businesses) need not be concerned, but the rules should be noted by all other businesses that hire contractors. IR35 is the name given to an Inland Revenue notice (Inland Revenue number 35) which explains obligations on contractors to pay tax in a different way whenever the contractor provides services through a third party, usually a personal service company (PSC). These obligations have existed since 2000. If the rules apply, the contractor has been required to pay employment taxes and NICs on the whole of the income it receives from a posting or assignment, with a top slice allowance of 5%. As this means that the individual receives a net amount far less than if normal company tax rules apply, most temporary contractors have worked hard to avoid application of the rules, and HMRC believes that there has been serial tax avoidance in this area. To address this, in 2017 HMRC changed the rules where a contractor is hired by a public authority, and it now plans to extend those changes to the private sector, so affecting all businesses except the smallest companies. So when do the rules apply? They do not apply to self-employed individuals who are not operating through a PSC (there is a misconception around this!). Because of a fear of employment rights claims and also the desire of the hired individual to maximise net returns, it has become common practice to engage locums and temporary support individuals via their own PSCs. It is these arrangements that the rules attack. What do the rules require? Where the working arrangements are such that, if there were no PSC, the individual would be regarded for tax purposes as employed, someone has to account for employed levels of tax and NICs on invoiced sums for work done/time spent. This also means that someone has to make a decision as to whether they apply. The ‘someone’ used to be the contractor, but is now switching to the hirer or other party who pays the contractor, for example an employment business that supplies the contractor to you. This party is known as the Fee Payer, who is now also to be responsible for payment of PAYE and NICs wherever the rules apply. The decision – ‘employed’ or not Assessing employment status is notoriously hard except in the most obvious of circumstances. There has been a plethora of cases over the last few decades which have always been about unclear arrangements, not the obvious ones. Much has been written about mutuality of obligation, direction, supervision, control and so on, and to address these intensely legal and argued over elements would mean this article would end up the size of a book! However in terms of key considerations, a business to business arrangement for a defined project as agreed at the outset is an excellent start. The tax and other ramifications Where the status decision is ‘employed’, you, as the hirer (or a third party, e.g. an agency if involved), are the Fee Payer and have to pay contractor invoices in a specific way. Because HMRC regards the arrangement as deemed employment, the invoice is treated as the salary of the individual. This means that the whole of the invoiced sum, excluding VAT, allowed expenses and cost of materials, must be treated as employment income subject to normal PAYE and NIC deductions. The company invoice must be paid net of PAYE and NICs and the Fee Payer must account to HMRC for the PAYE and employee and employer NICs on the invoiced sum. The result – a cost hike for you of some 13.8%, increased payroll admin for what was previously a simple supplier payment, and a lower net income for the contractor. It’s not surprising therefore that some trade associations are warning that there may be a drop in available locums and contractors. What can you do regarding temporary contractors? First, recognise that individuals who put themselves out to work temporarily will still be around. Whilst some may start to look for regular employment, finding it may be easier said than done! Also not everyone is determined to minimise tax payments as before. Some may be happy to work through agencies on their payroll or sign up to temporary employment contracts with you. If the engagement is for a period of time rather than specific tasks, and the contractor still wishes to operate through a PSC you can either accept the cost of employer NICs or negotiate a new rate. The contractor could work for you as self-employed without any PSC involvement, and you could keep the same rate of pay; however in this case you run the risk that HMRC (as above), or indeed the contractor, could argue that the arrangement is actually one of employment. Normal Employment Tribunal limitations apply to claims by the contractor. For those you assess as not ‘deemed’ employees it is critical that the contract you use is properly formulated and that the specified work to be undertaken is fully and properly described. The actual working arrangements throughout the assignment should be in line with the contract, so discuss with line managers to ensure there is no conflict. You should also keep a note of how and why you concluded there is no deemed employment in case HMRC investigates as the risk of an investigation exists for up to 6 years after the event. Conclusion This is a proposed invasive new method of taxing contractors that will affect hirers and those in a worker supply chain.
Improved access to shift schedules can reduce turnover among home care workers
Cristian Grossmann, CEO and Co-Founder of Beekeeper – a digital workforce management platform – on retaining home care workers through better access to shift schedules… It’s no secret that the UK care and nursing home industry typically has a higher rate of staff vacancies compared to others. A recent report showed that the vacancy rate in the adult social care sector was 6.6%, higher than the national average of 2.6%. Just as worrying, staff turnover in the adult care sector has climbed to 27.8% and has been steadily increasing since 2012. Stem the flow of high turnover among your care workers The industry must stem the flow of high turnover by investing in improving morale amongst employees and increasing retention rates of adult social care workers. One way to do this is to provide workers with earlier access to shift schedules to help them improve their work/life balance. Early access to work schedules changes lives This recent study highlighted how a fluctuating work schedule combined with last-minute shift changes can negatively impact workers. Unpredictable shift patterns create an inability to plan for needed childcare, medical appointments or socialising, as workers simply don’t have enough time to anticipate these needs. This causes employees to feel dissatisfied and stressed and less likely to stay with their job. The study also found that offering employees access to shift schedules just two weeks in advance made a huge difference in the quality of life for workers. There’s an app for that Technology can address the problem of high turnover with an internal communications platform that employees can access via an app or desktop, in which shift schedules are migrated from paper or email into an easy-to-access digital hub. The result of digitising schedules is that workers have improved access to their shifts, which prevents communication delays typical with the traditional approach to scheduling. Additionally, internal communication platforms offer home care shift workers the ability to instantly request schedule changes to management, enabling faster response times to requests and improving management’s ability to quickly find cover. This allows employees to have more control over their work schedules, which can dramatically improve overall job satisfaction. In addition to operational tools such as shift schedules, an internal communications platform like Beekeeper also offers instant access to one-on-one and group messaging, information sharing, surveys, training guides and health and safety information — all of which employees find extremely beneficial. In our experience, staff retention improves very quickly when employees have a platform that offers easy shift scheduling, access to information, and an immediate way to connect with management. It’s important to remember that your staff are your best asset and by investing in technology that makes their working life more harmonious, you will retain more talent, and build a happier, more productive workforce. For more information on improving shift pattern access for care workers, see Beekeeper
Busting the myths around the DBS check
As most people working within the care industry will know, all staff in care homes, hospitals and working as care providers in someone else’s home are subject to a DBS (Disclosure & Barring Service) check. Employers can encounter staffing problems if DBS checks aren’t done quickly and efficiently. Here, Care & Nursing Essentials editor Victoria Galligan busts some of the myths regarding DBS checks and explores what a DBS check actually is, who needs one and how to avoid costly delays when applying… There is only one level of DBS check for care workers Yes – for general employees in England and Wales there are three levels of DBS check – Basic, Standard and Enhanced. However, an Enhanced with DBS Barred List check is required for all staff carrying out “regulated activity” who work with vulnerable adults who fall into the definition of adults set out in section 59 of the Safeguarding Vulnerable Groups Act 2006 (before it was amended by the PoFA). Not all elderly people are classed as vulnerable adults True – but those requiring care are. The DBS clarify what a vulnerable adult is on their website, and the term ‘vulnerable adult’ was amended after it was felt to be inappropriate to label an adult as vulnerable solely due to their circumstances, age or disability. It states that, in general terms, a person aged 18 or over is classed as vulnerable when they are receiving one of the following services: All care work is classed as regulated activity True. Regulated activity – which a barred person is prohibited from doing – is clarified by the Department of Health document Regulated Activity (Adults) and there are six categories within the new definition of regulated activity which are listed above. There are similar rules concerning care employees working with children and the government document Regulated Activity in Relation to Children: Scope clarifies what is considered regulated activity which a barred person must not do. This is important to check, as regulated activity does not cover certain activity if it is supervised by another adult. But generally, all forms of health care relating to physical or mental health – including palliative care and procedures similar to medical or surgical care, advice or guidance provided for children relating to their physical, emotional or educational well-being and personal care cannot be carried out by someone on the barred list. If someone only works with vulnerable adults occasionally, it’s not regulated activity False: the Department of Health states: “There is no longer a requirement for a person to carry out the activities a certain number of times before they are engaging in regulated activity. Any time a person engages in the activities [listed above], they are engaging in regulated activity.” Staff such as porters and cleaners don’t need a DBS check It depends – any member of staff who carries out regulated activity with vulnerable adults needs an Enhanced DBS check. The DBS checking service check.co.uk clarifies: “This includes porters who transport patients around a hospital, as ‘conveying’ those who are receiving healthcare is listed as part of the definition of regulated activity.” However, people working for care homes who have access to care facilities but do not carry out a regulated activity – in roles such as food, cleaning, office work or maintenance – will likely be eligible for a Standard DBS check. Volunteers don’t need a DBS check Wrong – volunteers are under the same rules as paid workers but they can apply for a DBS check free of charge. The DBS checking service CRBS says of Enhanced DBS checks: “This level of check is only available to request on behalf of applicants who are working or volunteering in certain roles. For Enhanced DBS checks, this typically includes those interacting with children or vulnerable adults.” Employers have to pay for staff members’ DBS checks Not necessarily – it’s up to the employer whether or not to foot the bill. One DBS advisory service, clear check.co.uk. states: “There is no law which states that employers should be the ones who cover the cost of having a DBS check done, it’s just good practice for the employer to shoulder the cost. Not all employers take this approach though, and some may ask employees to stump up the cash themselves. For people who move jobs regularly of have more than one employer might then find themselves quite out of pocket, so if applying for a job which requires DBS checks it is worth enquiring about the process at the interview stage.” The answer to this may be to take out an Enhanced with DBS Barred List check, which costs £44, and pay the extra £13 to be added to the Update Service. This £13 is a yearly fee which will allow the applicant to make changes, and for the employer to make a status check of the certificate to see if changes have been made. And remember, with NHS staff complaining in the media recently that they are having to pay their own fees in some roles, employers have the opportunity to show how much the employee is valued by covering the cost. Employees can transfer their DBS check from job to job Possibly. If employees opt to be added to the Update Service, a new DBS check is not necessarily required for each place they work in – it’s up to the new employer. The Update Service website says employees will only need a new DBS check if: Employees can process a DBS check themselves Not for an Enhanced or Standard DBS check – they can only be done via the employer, who must use an “umbrella body” company to process the applications. They umbrella body can help avoid mistakes and omissions and generally speed up the time taken from application to receipt of the DBS certificate. And remember checks should be done on a regular basis to ensure they are still current – another reason to opt for the Update Service which will list new criminal convictions. The
Flexible Caring: The Need for Change
Christian Brøndum is the CEO of Planday, a start-up that provides workforce management software to businesses working across all sectors including both hospitality and care homes. Here, he tells Care & Nursing Essentials about how software can aid flexible caring and help deal with the challenges of retaining staff… Recently, Carers UK announced the results of a report which found that over 600 people quit their job every day to prioritise caring for older and disabled relatives. Anyone working in the care sector will be familiar with the unique stresses of caring for an elderly or disabled person. Perhaps even more stressful is the fact that often, employers fail to provide the flexibility necessary for workers to keep their jobs whilst caring for their loved ones. Whether you work in the care sector or find yourself struggling to care for relatives whilst working, the need for flexibility is a pressing issue. Care work was found to be the most stressful profession in a recent survey; respondents cited the workload in the industry, having to cope with tight deadlines and the potential impact of making a mistake as their reasons for feeling stressed. Alongside this, 47.4% of respondents mentioned that work-related stress impacts their lives outside of work, highlighting the need for a refreshed look at work-life balance in the industry. A new perspective is needed to revitalise the motivation and culture of the sector. New resources brought about by technological advances can help care homes deal with these particular challenges. The arrival of the cloud, for example, has encouraged businesses across all industries to provide online and mobile platforms which redirect more control over scheduling back to employees. The sophisticated technology helps with increasing contact with employers, speeding processes to ensure deadlines are more achievable, and helping teams to communicate more easily to avoid mistakes. A ‘personal’ management style is not always enough when dealing with teams with varied skills across multiple sites. Digitalizing your management approach reduces the amount of time spent on traditionally manual processes and lowers frustration amongst employees, meaning that retaining those employees becomes much easier. With a 2018 Skills for Care report finding that employee turnover rate in adult social care is 30.7% (equivalent to around 390,000 leavers in the past 12 months), there’s a considerable need for an improved focus on retention. An online platform for workforce management means that problems are flagged and dealt with before they cause any complications. Mistakes are fewer and both patients and employees benefit from a more open and efficient process. The trend for flexible working is increasingly being adopted in other sectors and has the potential to go beyond being merely a trend and become the norm. All workplaces can make small changes to put welfare at the core of their management style, and help to have happier, more effective employees. For more information on flexible caring, see the Planday website.
Eastenders star celebrates care workers at glitzy awards event
Actor Shaun Williamson, famous for playing Barry in Eastenders, was the host of a glittering awards evening to celebrate staff at specialist care provider, Cornerstone Healthcare Group. Shaun helped to celebrate the long service of more than 30 Cornerstone employees at the newly refurbished Langstone Quays Hotel in Havant last week. All of the staff ‘VIPs’ have worked for Hampshire-based Cornerstone Healthcare for more than 10 years, with four of them celebrating more than 20 years loyalty and dedication to their residents and the company. Cornerstone Healthcare employs 381 staff at two specialist nursing homes; South Africa Lodge in Waterlooville and Kitnocks House in Curdridge. The service cares for people with challenging behaviours associated with complex neurological, physical and mental health needs. Shaun said; “This has been the most amazing evening! It was an honour to meet such a committed and energetic group of people. They are doing such important work in a sector that has a tendency to be under appreciated and it’s great to see them being recognised.” Cornerstone’s CEO, Johann van Zyl, joined Shaun in applauding the staff for their commitment. “We value our team and we hope this award ceremony shows them how much,” he said. “Continuity of care is so important for people with dementia or mental health needs and we work hard to make this a supportive environment for our employees. “The staff turnover rate in the UK generally is 18%, and for the care sector that goes up to 33% – ours is just 8% so we’re doing something right!” Chief Operating Officer for Cornerstone Healthcare, Dara Ni Ghadhra, said: “Our staff are at the forefront of this really challenging industry every day and they deserve every accolade. We are thrilled to give them this recognition.” As well as ongoing training and development, which sees staff members’ ideas and initiatives at its heart, Cornerstone also offers a psychological counselling service to help staff deal with the stresses of supporting people with complex needs. More than ten per cent of Cornerstone’s staff have over ten years’ service. Janice Parker has worked at South Africa Lodge for 23 years as a carer and was among those recognised at the event. “I love my job but to have this recognition is so special,” Janice said. “It’s been a fantastic evening and it’s given us all a little boost to know that what we do each day for our residents doesn’t go unnoticed.”
