Staying in the same public sector contract after April 2017

[bobspud]

Nope, a change in the law is material grounds to change a contract to keep it in line with that law.

Contracts will be terminated, news ones will be issued. Sign or walk is the choice you have.

Ah but I think there is a material difference between doing what the MoD has done today and what TFL and UKHO chose to do instead...

One is a measured approach and the other was a totally uncontrolled flip out. If you are a supplier that just lost key sub contractors because of what the other two have done Im sure there are grounds for compensation due to them causing losses through negligent behaviour.

[northernladuk]

Ah but I think there is a material difference between doing what the MoD has done today and what TFL and UKHO chose to do instead...

One is a measured approach and the other was a totally uncontrolled flip out. If you are a supplier that just lost key sub contractors because of what the other two have done Im sure there are grounds for compensation due to them causing losses through negligent behaviour.

I can't see that going anywhere. There is negligence and just doing something rather badly. I don't think, as much as it is a clusterf**k, that it is negligent. Might seem it to you but I very much doubt the law would.

[bobspud]

I can't see that going anywhere. There is negligence and just doing something rather badly. I don't think, as much as it is a clusterf**k, that it is negligent. Might seem it to you but I very much doubt the law would.

If I have 20 people on site and they are delivering to spec and I am making 400 a day on average from them and have 12 months to run on the contract. Materially losing them all because the client spoke out of turn is most definitely interfering with my firms livelihood and has damaged the contract that I have in place as a result...

you won't find the civil servant in question saying "Whoops my bad..." but that contract will need remediating for material damages.

Its the same as what happened when Fujitsu walked away from the spine contract. It wasn't their fault... they need paying.

[avalon111]

How many contractors in central government?

Lots of quotes from this Civil Service World magazine article from June 2016. My choice selection is;

(Jonathan Green, research section head at Prospect)

“Clearly departments should be looking to reduce the size of their non-salaried operations and shift to having more salaried staff. If they did that, there might be scope for giving people a bit of a pay rise.”

Green said some departments’ non-salaried staffing costs appeared to fluctuate more than others’.

“That’s the case for the Environment Agency, and we know that the Department for Transport is bringing in private sector skills to fill gaps with franchise costing,” he said.

“What’s interesting is that in organisations like the Hydrographic Office, their figure is about 12% and it doesn’t change from month-to-month. That kind of situation looks like a workforce planning issue.”

I wonder if that provoked the blunder the MOD inflicted on itself? There's quite a few fixed-term development roles at the Hydrographic Office right now.

Civil Service World gave the Cabinet Office, NOMS, the UKAEA and the MOD the opportunity to detail their use of non-salaried staff to put Prospect’s research into context.

The UKAEA said the majority of its off-payroll contractors were working in specialist scientific and engineering roles at the Joint European Torus fusion research facility in Abingdon, Oxfordshire.

“Non-salaried posts allow flexibility for highly-skilled and technical staff to work on short-term projects according to demand,” a spokeswoman said.

“This means that staff are able to work at the JET fusion research facility on major enhancement and maintenance programmes. UKAEA regularly reviews this situation, hiring permanent positions where necessary.”

She added that the Prospect figure for UKAEA was an average for the year and that the actual number of off-payroll contractors had fallen from 460 to 370 during the period.

In relation to NOMS’s headcount of non-salaried staff, a Ministry of Justice spokeswoman said the service had “always used temporary staff” to ensure the prisons and probation service was safely and efficiently run.

Meanwhile, the Ministry of Defence said: “Spend on non-MoD staff is only used for work where the MoD does not already have the specialist skills needed to support crucial defence programmes.

“We use non-salaried employees for short-term roles as they offer better value for the taxpayer than maintaining all the specialist skills we need permanently in-house.”

The Cabinet Office had not responded to CSW's request for comment at the time of publication.

A recent report by the National Audit Office found that while departments had “substantially” reduced their spending on consultants and temporary staff over the last five years, spending on such workers had begun to creep back up in the last three years, suggesting only a “short-term reduction rather than a sustainable strategy”.
New research reveals scale of civil service’s use of contract workers | Civil Service World

Looking through the list of public bodies exempt from FOI 2000 - I didn't include GCHQ in a past posting - I note that UKAEA isn't included. (https://foiwiki.com/foiwiki/index.ph...nformation_Act)

I think the key risk for such organisations will encounter, particularly for those public bodies using engineering contractors that are off-payroll, won't be seeing them trying to hop to the private sector, but rather those highly-skilled folk deciding to retire inside the next month.

The worst-case scenario is losing key operational engineering support, leading to a reactor having to be shutdown. More likely the JET project will simply stall.

[b r]

There's quite a few fixed-term development roles at the Hydrographic Office right now.

Absolutely worse-case type of job IMO - full PAYE with no/little protection or job security, #wageslave

[LondonManc]

Absolutely worse-case type of job IMO - full PAYE with no/little protection or job security, #wageslave

Correct, on the whole; depends what the rate is to an extent though.

[NHS1979]

So, the NHS in my part of the world have finally popped out a letter to all contractors. They seem to be choosing not to impose a blanket decision, but instead decide case-by-case using the dreaded tool. This probably reflects their heavy reliance on interim staff, some of whom travel great distances. Letter says:

"Dear
As a current Contractor/Interim currently engaged by xxx Clinical Commissioning Groups I am writing to inform you of important changes to legislation concerning IR35 for public sector organisations.

You may be aware that IR35 is part of UK law that establishes the rules for the tax and National Insurance Contributions payable by contractors who work for clients through an intermediary such as a personal services company or as a sole trader. From 6th April 2017 public sector employers will be required by law to decide whether IR35 applies to the contractors they engage, rather than the contractors determining this status themselves. This will apply whether the contractor is engaged directly through a Contract for Service or via a
recruitment agency.

With this change in legislation pending XXX CCGs will be undertaking in the coming few weeks a thorough exercise to assess which roles currently being undertaken by contractors/interims fall inside or outside the IR35 regulations. To assist with the assessments a digital tool provided by HMRC will be utilised and this will involve a questionnaire that requires completion by both the contractor and the CCG. This process will provide HMRC with the necessary assurance in determining whether IR35 applies or not.

Following this exercise where roles are deemed to be within IR35 for those contractors affected there will be changes to the current method of payment for the service provided. For directly engaged contractors XXX CCGs will be responsible for calculating the appropriate level of tax and NI contribution and this amount would be deducted before any payment is made. Recruitment agencies supplying interim staff to the CCGs will be responsible for ensuring the correct deductions are applied following direction from the employer regarding IR35 status.

Once there is more detail relating to this particular issue I will write further to provide an update and some clarity on your personal position from 6th April 2017 onwards. However if you have any queries in the meantime please contact (HR Business Partner).
Yours sincerely"

Resignations to get out of contracts are already happening. Those tempted to stay are now wondering with their NHS clients how to craft new roles that materially alter working practices and contracts to make new outside-ir35 roles. Others are seeing if there's scope to switch to a different host organisation (i.e. from PB A, to PB B, doing same work).

I am still planning to leave on the basis that I am outside now, will likely be brought inside by the tool, and don't want to flag up on some HMRC list as an easy target for retro grabbing.

[northernladuk]

You can bet most of the contractors think they are outside but the tool is going to put most of them inside. Anyone still there, even if they are ready too leave are too late. Join the queue.

[psychocandy]

The devil is the the details. We've discussed engagement through a consultancy at great length. It depends on how that consultancy is engaged and the scope.of their work. Ultimately we still don't really know as it's complicated. For example. If the contractor is through a consultancy offering a managed service its not strictly correct to say he's doing BAU work for the PS. He's delivering the services contracted to the consultancy. That said they might still be caught. It's complicated.

You need to get a better understanding of the whole legislation, read the threads to understand the nuances and then you can look at different engagements and start making an informed guess at the situation.

Agreed. Another reason why this legislation is a complete mess.

[psychocandy]

A PSEC body should start by reviewing all its suppliers where the supply includes any individuals providing services for which the PSEC benefits. It then has to make a determination as to whether the individual would be regarded as an employee for income tax purposes, if it were to look through any intermediary. S.61M(1)(c) defines an intermediary as a third party. This means that you can call yourself a consultancy if you like, but you are an intermediary and the PSEC still has to make the determination. A good example would be a firm of auditors; they should be in scope as there is a bunch of individuals providing a service to the client and that if there were no third party entity between the individuals and the client, income tax law would look to categorise them as employees. However, the contractual relationship will overrule this as you would expect the audit fee will be priced as fixed, and that the individuals do not answer to the client, but to management in the audit firm etc.

Where there is a chain of intermediaries, the PSEC should inform its immediate supplier, who should then trickle that decision down the line. If this is not known before the contract commences, the legal person above the lowest intermediary should ask his client to ask the question of his client, and so on until the PSEC makes the determination. In plain English, this means that where you have Individual > PSC > Agent 1 > Agent 2 > PSEC, then Agent 1 is the fee-payer and the one with the risk in the absence of any determination. Agent 1 should therefore ask his client, Agent 2 for a determination. Agent 2 is not PSEC, but by formally asking him the question, Agent 1 has now made him the fee-payer (and hence potentially liable) under s61S(5). Agent 2 therefore will immediately ask the PSEC to push the liability on and force the determination.

The legislation is not intentionally misleading; it’s quite clear.

Good explanation. I'm in that situation at the moment.

So I've got contacts with both the agency and the consultancy but not really the end PS client. After all they are my clients customer so I dont feel its right for me to approach them.

In my case, though, what I've done is:-

1) Approach agency and tell them basically what you said above that they need to ask the question of the consultancy.

Answer: No its ok you're outside IR35.

Me: Please check this properly.

Answer: Umm. OK. Not sure - we'll get back to you on that one (this was before Xmas).

2) Approached consultancy client. Told them that I'd ask the agency to contact them and they, in turn, would need to contact the end PS client.

Answer: What? You're going to leave unless it gets sorted? Umm, no not heard anything from anyone. We'll check with head office and get back to you.

Me: Yes it needs to be sorted.

Answer: Dunno yet. But off the record, PS client knows nothing about this either. (again before xmas).


This is going to be the problem for a lot of people. Agencies aren't interested/too thick to work it out and would rather just hope for the best and sign people up. Consultancies/end clients just dont get it.

The payment in April idea also makes it a lot worse because, of course, it possible affects work up to a month before that.