Having spent April in lockdown, recruitment agencies, like most other businesses in the UK continue to feel the effects of the Coronavirus. Continued hiring hesitance, more news on the IR35-front and the arrival of a number of changes included in the ‘Good Work Plan’ meant April, much like March, was an eventful month for recruiters.
Here, we take a closer look at the major developments in April’s recruiter news round-up...
House of Lords IR35 report arrives
The House of Lords published its report into IR35, with the Lords declaring the legislation “riddled with problems, unfairnesses, and unintended consequences.”
With reform to the off-payroll tax having been delayed by a year in the private sector because of Covid-19, the Lords encouraged the government to rethink IR35 in the next 12 months and make “wholesale reform” to these rules. The report also recommended that the government decides on the changes in six months when the impact of Covid-19 is expected to be less felt.
Will the government listen? It seems unlikely. On the day the report was published, Financial Secretary to the Treasury, Jesse Norman, insisted reform is to be introduced next year. Although, he did announce that a review into public sector changes will be held - advice that was put forward by the Lords.
Good work plan changes arrive
A number of legislative changes included in the government’s Good Work Plan came into force at the start of the 2020/21 tax year on 6th April. The abolition of the Swedish derogation model was the headline change - it means ‘pay between assignments contracts’ have been scrapped, with agency workers to be given the right to the same pay and treatment as permanent employees in the same role after 12 weeks. Also included was the introduction of a Key Information Document - recruiters must now provide all workers with this, making sure the individual is clear on the details of the engagement. You can read more about the Good Work Plan here.
Hiring hesitance continues
Coronavirus saw business confidence plummet to record lows in April, which had a huge impact on hiring decisions. According to staffing body, REC, the demand for contract and permanent staff fell into negative territory, as the need for workers dropped.
While this is worrying, REC CEO, Neil Carberry, was optimistic about the longer-term picture, explaining that the data makes it “clear that companies will be looking to hire as soon as the economy opens up again.”
Recruiters told to learn from previous downturns
After what was described as a “sobering” month for recruiters, only 5% of whom expect to increase profits in the next 12 months, the Recruitment Sector Barometer Report advised agencies to learn lessons from previous economic downturns. To speed up the recovery process, recruiters have been urged to prioritise “cashflow” and “lay the groundwork for recovery now”, although the author of the report, Alex Arnot, did concede that “there is no playbook for this unprecedented situation.”
‘Bounce back’ loan unveiled
In addition to the support already available for businesses affected by the Coronavirus, in April the Chancellor announced a new 100% government-backed loan for small businesses, available from 4th May.
This ‘bounce back loan’ allows companies to borrow a quarter of their turnover up to £50,000, with no repayments due for the first 12 months. APSCo’s Tania Bowers welcomed the arrival of this help, which offers recruiters “a rapid cash injection in a matter of days”. While the 100% government guarantee, zero interest and no fees for the first year will also be “welcome news” to smaller struggling recruitment firms.
Support from Parasol
As always, we're keeping up to date with all the latest news within the industry in these uncertain times. We've been keeping our Coronavirus Support for Recruiters page updated with all the latest updates from the Government regarding the support they're offering businesses.