Month: January 2020

 

 

So fair bit of talk recently about IR35 and the proposed changes by the HMRC to close that tax loophole that exists to the benefit of PSC’s – personal service companies. IR35 refers to the UK anti-avoidance tax legislation, which is designed to close the hole exists where self-employed individuals are employed to conduct roles in companies where that role would normally have been conducted by a full-time employee.

The benefit to the self-employed individual is they’re paid on a gross basis into their own limited company. They then can pay themselves through dividends at a lower tax rate and avoid NI. It also benefits the company as they save on NI and pension contributions while having less risk as well from an employment litigation point of view, if they need to for example remove somebody. So not great for the HMRC who often lose substantial amounts through tax revenue.

IR35 sets about to provide guidance on what’s classified as an employee and what would be generally classified as a contractor. So if you’re inside IR35 that means you’re considered for tax purposes as an employee of the end client, therefore, you’ll be subject to PAYE; if you’re outside of IR35 this means that you are operating as a genuine business and therefore outside of IR35.

To be outside of IR35, there’s a number of criteria must meet for example the right substitution; so you must be able to have the option to send somebody else as equally as skilled in your place for the contract if needed; it’s around the levels of control, so a self-employed individual might agree to perform a particular task at a specific time and place but unlikely there’s any other real controls around what they do i.e. not being closely monitored by line manager.

Financial risk – the contractor has their own equipment they indemnify themselves against any losses or damages due to negligence. They are obliged to correct any defective work at their own expense.

Mutuality of obligation – a self-employed individual will do the work they’re being contracted to do and when they finish there’s no further expectation of any further work.

So what’s changing? Well in April 2020 legislation reforms are set to be introduced into the private sector; they’re already in place in the public sector as of April 2017.

This affects all medium to large organisations; they are defined as having an annual turnover of 10.2 million or more or a balance sheet of 5.1 million or more and the proposed change basically shifts the responsibility to assess IR35 from the contractor to the end client.

So this is far easier then to monitor and review for the HMRC.

However, this obviously leaves organisations with the huge task then of assessing their contractor workforce for IR35 compliance  and then putting in rigid checking policies in place in order to ensure that they avoid any HMRC fines and back payments of tax excetera, so big job for organisations. For those that are currently self-employed contractors, they’re going to need to review their status and then be prepared then as well to appeal any decision made by the client to simply register them in as inside of IR35.

They may do this to protect their position in the short term, however, it would then mean that individual is then subject to PAYE which they weren’t before.

So if you know anybody needs any further help or support on this then just feel free to drop us a line.

Thank you.

 

New Year; New Start?

Many of your employees could be thinking this and you may be about to lose great people!

January is that time of year when many of us look to move on and start the search for a new job. With end of year/Christmas bonuses safely in the bank and the “new year, new start” mentality kicking in, now is the time some will look for their next challenge and “something new”.

Employers need to work hard to retain talent and so should take steps now to ensure that they do so.

Some tips to help engage, motivate and retain employees include:

• Thanking them for all of their hard work last year and let them know what lies ahead for 2020 – make them feel appreciated and connected to the business.
• Allow people to work flexibly! This doesn’t have to mean part time, different hours permanently or working from home all of the time – just the ability to start a couple of hours later one day to make a school assembly, or work from home for an afternoon to wait for a delivery. Help employees to fully commit to both their personal and professional lives!
• Charity focus – Allow employees time to volunteer at their chosen charity; support a local cause or introduce a scheme to match money raised by employees for charities close to their heart.
• Focus on employee health & wellbeing! Help employees live better both physically and mentally. Look at mental wellbeing programmes, help to quit smoking, healthier living – all of these things help to create a healthier workforce, feeling great and therefore performing at their best.
• Support growth and development – provide access to training courses, internal coaching and mentoring. Succession plan for the future and keep hold of those key individuals.
• Be open and honest with your team.
• Trust your employees!

There are many ways to create a more engaged, motivated workforce and what works in one business, may be different in another; but what is true of any organisation is that people are at the heart of it!

Employee engagement is the key to improving employee productivity and loyalty in the workplace – can you afford to ignore it?

 

Should I fire the problem employee?

A common problem faced by many of our customers.

Unfortunately whilst your employees can be the difference between you being a good company and a great company; it only takes one bad egg to destroy all of that good work.

If the bad employee commits an obvious act of gross misconduct or continues to regularly break the rules, behaves inappropriately then resolving the problem is really easy. You need to follow a fair and consistent disciplinary process that has been defined in your company policies and procedures; you’ll most likely require HR support and guidance to work you through that, but ultimately dismissing that type of employee is pretty straightforward.

The more difficult issue is that employee that never commits an act of gross misconduct; however is constantly getting close to doing so. They’re constantly committing smaller acts of misconduct, that in isolation aren’t a problem, but grouped together become a significant headache for you.

Your good employees are fed up with them, as they’re constantly undoing the good work that they’re doing and delivering. They’re divisive and continually negative; you wish you would never taken them on, but getting rid of them feels like a mountain to climb and full of risks you feel like the law is against you in every turn that you take with these individuals and it just feels like they’ve got you by the short and curlies.

You continually dream of them resigning, however, of course, that would be way too much effort for them to do so.

At Harwood HR Solutions we classify these employees as internal terrorists; sounds over the top I know and whilst you can’t compare these guys to regrettably the people that we know exist in this world, if left alone and unchallenged gradually, they will bring your business to its knees.

Slowly but surely your best employees will start voting with their feet and so will your customers and the reputation that you spent years building up could potentially be destroyed.

Sound frightening? Well it is or can be but here’s the good news, you can and should be dealing with these employees swiftly and without need for sleepless nights. Of course, good policies procedures and proactive assertive management will prevent 90% of issues from developing, but when one slips through the net you should consider the commercial impact that has been had on your business.

Weighing up the damage that that employee is creating for you financially and reputationally and then looking at that versus the cost of resolving the issue swiftly, quite often gives you an obvious path to take. A good HR practitioner will help you through the option and decision making process.

The chances are that if you’re growing a business you’re gonna have to recruit employees. So if you want to do so, you shouldn’t let this problem put you off. You need to act fast and resolve these situations before they become a problem.

If you need help with this then click on the link below leave us your contact details on will give you a free consultation.

Thank you very much.