For the last few years there have been numerous discussions on the future of the interim market. A year on from Covid-19 restrictions and the introduction of the new IR35 legislation, we discuss the current state of play and what has led us to this new exciting chapter.
IR35 – what was the impact?
Due to the impending legislative changes of IR35, combined with the uncertainty created by the Covid-19 pandemic we saw a dramatic drop in the supply of good interims in the market. With the majority of interim roles falling in scope of IR35, many people felt the rewards of the contracting market were no longer worth the risks and opted for permanent employment.
However, in the last year the landscape has somewhat changed…
What is the interim market like now?
Simply put, much like permanent employment, the interim market is also operating heavily in the candidates favour. The UK is exhibiting the highest number of vacancies it has seen in the last twenty years and PWC predict one in five workers will move jobs this year. Given the supply and demand issues that the permanent market faces, this has created extensive opportunities for interims to bridge the gap, whilst organisations struggle to attract permanent staff.
In addition to this, organisations have undergone dramatic changes over the last two years, creating significant growth and transformation across all sectors. The digital revolution that the UK is experiencing is opening up a world of project opportunities for the interim market. From system implementations through to business case analysis, there are an extraordinary number of interesting consulting opportunities currently available. Not to mention the usual seasonal peaks that we see, such as helping deliver year end or specific regulatory submissions.
Limited Company, Umbrella company, Fixed term contract – What are they and in what situations would you encounter them?
Limited company: The vast majority of interim roles pre the new IR35 legislation were operated through limited companies. As it currently stands, this number is now closer to 25%. A limited company set up is tax efficient, can minimise personal liability, create higher personal remuneration and build credibility and trust. You will however only encounter these roles if the contract in question sits outside of IR35 or the client company benefits from the ‘small company exemption’. An outside of scope role should have key project deliverables, its own autonomy and direction and a suitable substitute. The ‘small company exemption’ refers to a client company that has turnover of less than £10.2 million, balance sheet assets of up to £5.1 million and average number of employees of up to 50.
Umbrella company: Three quarters of interim placements post IR35 legislative changes are now PAYE, and therefore interims are typically paid via an Umbrella company. The Umbrella company manages the pay rolling, tax returns and provides protection. This does however come at a small fee that can add up over time. If your role falls inside IR35 legislation you will no longer be able to benefit from operating via your Ltd company and unfortunately this is your only alternative if you and company’s preference is pay you via a day rate.
Fixed term contract: Generally longer term interim roles are offered as a fixed term contract. Maternity covers, secondments or roles expected to continue for extended periods of time are deemed as more attractive by both candidates and companies on a fixed term contract basis as you will enjoy many of the benefits you would expect to see in a permanent role, not to mention the inflated salary. Notice periods are generally longer and therefore create less risk and more stability.
It’s a fantastic time to be an interim given the amount of opportunity out there. The increase in demand is inflating day rates and salaries to a point where the interim market is once again attractive from a remuneration point of view. In a post pandemic world it also provides the opportunity to live more flexibly as you can take the time out between each contract, whilst gaining exposure to multiple companies in a short space of time.
Understanding interim, the day rates on offer, whether inside or outside of scope, and the pros and cons can be a daunting task if you are not familiar with this route. However this can be made a very simple task if you partner with an experienced interim consultant. Let them take the strain, do the hard work and get you through the door. You do the rest.