It’s normal to feel a little pressure at work. A certain amount is healthy and helps us to be more productive. But when the pressure becomes too much, you may begin to feel overwhelmed and stressed. This is when it becomes a problem.

Stress can affect anyone, in any workplace and at any time. But if it isn’t dealt with, it can have catastrophic effects on health, wellbeing and ultimately your productivity – and that of the business.

Why managing stress is important for business

Research by the Health & Safety Executive found that 12.8 million working days are lost to stress every year. Another survey revealed that 1 in 5 of us call in sick due to stress. The writing is on the wall: stress is damaging to business success.

The health risks of workplace stress

Stress is the human reaction to being overwhelmed or under threat. It’s a natural reflex and is part of what’s called the ‘fight or flight’ response. But when this becomes repetitive, it takes a big toll on our bodies. Risks include:

• a lowered immune system
• heart disease
• poor mental health
• high blood pressure
• digestive issues
• fertility problems

Symptoms of workplace stress

When stress hits, it makes itself known. Here are some symptoms to look out for:

• faster heartbeat than normal
• upset stomach
• headaches or dizziness
• tense or painful muscles
• difficulty concentrating
• finding it difficult to make decisions
• forgetting things
• worrying a lot
• being irritable
• change in appetite
• engaging in coping behaviours (e.g. drinking, smoking)

Ways to reduce stress at work

1. Talk about it

They say that a problem shared is a problem halved, and it’s not just a myth. If you’re feeling overwhelmed at work, call a friend or family member and talk about it.

Or if you feel comfortable enough talking to your line manager, put a 121 meeting in their diary to discuss how you’re feeling. Or call your HR/People person/team.

2. Take regular breaks

Taking regular breaks from your work actually makes you more productive than if you power through your day. Try the following: 25 minutes of concentration followed by a 5-minute break and a 15-minute break every 2 hours. And by ‘break’, that means stepping away from your desk and disconnecting with your work completely.

3. Create a list

If you’ve got lots of ‘to-dos’ in your head, an easy way to take the pressure off is to write everything down. If you like to be organised, you could even colour-code each task in order of priority to get your workload in order. Remember to tick them off as you go for that sense of achievement.

4. Need help? Ask for it

You’re only human and you can only do so much. So, it’s important to identify when you’ve got too much on your plate and you begin to feel stressed. Your line manager is there to ensure your workload is manageable, so be sure to discuss it with them if it gets too much.

Remember to delegate to your team, too. What tasks are there on your to-do list that someone else could easily take on?

5. Break it down

A big project can easily seem daunting, and it’s easy to let it stress you out. Take some time to break your projects down into small, bitesize tasks. This will help you to approach the work in a different way and see it as doable, rather than challenging.

What are the different steps for the project? How long will each one take? What tasks will you set yourself and others in order to tick off each step?

6. Get moving

It’s a known fact that exercise gets endorphins flowing, helps boost your mood and looks after your mental health.

“Doing something physical releases cortisol which helps us manage stress. Being physically active also gives your brain something to focus on and can be a positive coping strategy for difficult times.”

If you’re feeling stressed, make sure you get your body moving. You may not feel like it at first, but pushing yourself to exercise will help you feel better in the long run.

7. Schedule some down-time

Make sure you plan in some ‘me-time’ where you can practice some self-care. The human body can only take on so much, so taking some time to rest and re-charge is essential for managing stress.

Something as simple as a short walk or break during your day can be beneficial. Just make sure you get a breather. Meditating works wonders too- we recommend the Headspace app for a few minutes of peace.

8. Maintain a work-life balance

When you’ve got a lot on your plate at work, it can be easy to work that extra hour in the evenings or check your emails at the weekends. This is an easy – but dangerous – habit to fall into. Apparently 50% of the UK workforce regularly work through their breaks and outside of their working hours.

Establishing the line between your work and personal life is crucial for minimising stress and preventing burnout. You will find you are more productive if you stick to your contracted hours.

If you need further assistance please contact nicola.goodridge@goodhr.co.uk or +44(0)7917 878384

Whilst many employers may see the return to office working as an opportunity to recapture the previous culture of their organisation, the majority of employers will now be facing a new way of working from hybrid office and home working to some employees moving to fully remote roles, which brings with it different challenges that can impact morale and cause disruption within your teams.

There are many benefits to being able to bring employees together again in person, but this should be seen as an opportunity for companies to adapt and build on their values and culture, as well as improving employee well-being and enhancing team spirit.

Be transparent

If your office has reopened or you’re about to reopen, use this time to re-share your office policy or circulate your new policy if you have adapted it to reflect the new ways of working. This allows your staff to feel prepared when they walk back into the office.

Honesty remains the best policy. Set the tone with your people as to how you would like your company to be run going forward. Whether you want an office presence every day from a portion of your employees or are happy for different departments to work out their own office/homeworking schedule, communicate this to your staff so they feel they can make decisions that feel right for them.

Lead by example

You may want to urge your senior management to have a presence in the office. If your people see a blend of staff from all tiers heading into physical workspaces it may encourage them to venture in themselves. If they feel it is one rule for them and another for management, they may be reluctant to return to the office.

Take into account whether the environment works

If you’re adopting flexible working with staff working both from your premises and from home, consider the layout of your office. Prior to the pandemic, set desks spaces will likely have worked but if you’re moving to a hybrid situation then a hot desk policy may suit the adaptable nature. If staff are on the whole coming in more for meetings, consider break out spaces that allow for teamwork, strategizing and the throwing around of ideas.

Consider new team dynamics

There may have been changes affecting the dynamics of your team during the pandemic, for example, new starters who joined the business remotely, missing colleagues if there have been redundancies, role changes that have happened whilst everyone has been working from home, as well as new flexible working arrangements or hybrid working models. Think through the best way for your team(s) to work together and communicate this to them either virtually or in person, ensuring collaboration between new and existing staff.

Be aware of office politics

Old HR issues which have been avoided at home could re-surface as employees venture back into workspaces. For example, working from home may have allowed some individuals to leave office politics behind and they may be concerned about whether the previous conflict might be re-established when they return.

Open dialogue for staff to air any concerns they have about returning to the office, so you are fully aware of and can prepare for any issues or stumbling blocks.

Consider your management style

Employees may have become used to working more autonomously, with many thriving under a more relaxed management style during the pandemic. They may not respond well to being managed more closely again. If your staff have been delivering for you while working from home, trust that they will continue to do so. You can have regular check-ins, either in person or via video call, to see how they’re performing and check in on their mental health.
That said, new starters who have joined your company while you’ve been operating remotely, or you have recruited since your premises re-opened, may prefer a more hands-on approach to get to grips with how working in your office operates.

Gather staff feedback

Actively asking your staff for their thoughts may lead to them feeling more engaged, which in turn boosts morale and performance, helping you to reach your business goals.

Employee engagement platforms are a great way to do this, as they allow you to gain anonymous feedback and provide you with an insight into how your employees are really feeling. This then gives you a starting point as to whether there are any issues that need to be addressed.

If you need further assistance please contact nicola.goodridge@goodhr.co.uk or +44(0)7917 878384

An employer that intends to ask employees if they have been vaccinated against coronavirus (COVID-19) must be clear about its reasons for doing so. To comply with its data protection obligations, it must ensure that it has a legal basis for processing such information and that it complies with the conditions for processing special category data (relating to employees’ health) under the UK GDPR.

The Information Commissioner’s Office has published guidance for organisations on when collecting vaccination data can be justified. Depending on its reasons for asking about vaccination status, an employer may be able to rely on its legitimate interests and compliance with employment rights and obligations as the basis for processing such data.

However, in a nutshell, your reason for checking or recording people’s COVID status must be clear, necessary and transparent. If you cannot specify a use for this information and are recording it on a ‘just in case’ basis, or if you can achieve your goal without collecting this data, you are unlikely to be able to justify collecting it.

It is likely to be easier to justify collecting such information in certain workplaces, for example in a health or care setting where coronavirus presents a specific risk.

If you do collect this personal data, you must ensure that it is kept securely and that it is shared only with the specific people who need to access it. It must be kept for no longer than necessary. An employer could consider keeping anonymised records, if its aim is to monitor levels of vaccination across the workforce, rather than recording whether specified individuals have been vaccinated.

The employer must provide employees with information about how and why their vaccination data is being processed. This could be an update to an existing privacy notice or could be provided as a separate document.

Employers should be aware that an attempt to impose a mandatory vaccination policy would risk a number of legal claims and employee relations issues.

nicola.goodridge@goodhr.co.uk or +44(0)7917 878384

For employers that are moving to the hybrid working model, ground rules need to be set for employees who are operating under this new way of working. Below are some tips on how any policy should be structured and what it should contain…..

1. Introduce the concept of hybrid working

Employers can begin their policy by explaining that hybrid working, which is sometimes referred to as “blended working”, is a form of flexible working that allows employees to split their time between attending the workplace and working remotely (typically from home).

The policy can also highlight the benefits of hybrid working for both the employer and workforce. These benefits include:

• helping the workforce to become more agile in the new working environment created by the coronavirus pandemic

• enhancing the employer’s commitment to supporting a positive work-life balance.
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2. Define who is eligible for hybrid working

It is important for the policy to set out who is eligible for hybrid working, for example by making it clear which roles are suitable for this way of working.

The employer may have concluded that hybrid working is not suitable for some roles, such as certain sales roles where face-to-face contact and the personal touch are essential. The policy can make this clear and explain the rationale.

The clearer the employer is on which roles are suitable for hybrid working, the less likely it is that there will be disputes with employees over whether they can move to hybrid working.
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3. Set out expectations on attending work vs working remotely

The policy should set out clearly the number of days per week employees are generally expected to spend attending the workplace compared with working remotely. For example, it could be that the employer is aiming for a 50/50 split between attending work and working remotely.

However, the policy should also build in a degree of flexibility, with the ratio for each employee ultimately depending on:

• individual circumstances

• the nature of the role

• what is happening within the role and team at any particular time

• the employer’s operational needs, including the space it has available at work locations.

Given the degree of flexibility that hybrid working arrangements provide for employees, the policy can emphasise that the employer expects the workforce to be flexible. This could include requiring staff to attend work in particular circumstances, for example for in-person training and for meetings that their line manager has determined are best conducted in person.
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4. Describe the working arrangements for workplace attendance

The policy can set out what arrangements employees can expect when they are attending work, particularly around:

• working patterns, with an emphasis on employees’ working hours (for example if the employee is expected to stick rigidly to regular hours or if flexible start/finish times are allowed)

• workspaces, including an explanation of any hotdesking arrangements.

It is essential that the policy sets out any safe-working measures that are in place, which could include spacing out workstations, compulsory mask-wearing in certain areas, and regular cleaning schedules.
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5. Provide guidance on remote working

The policy can provide guidelines on what is expected of employees while they are working remotely. This section of the policy can cover:

• working patterns and maintaining a work-life balance

• sickness absence reporting when working remotely

• technology and equipment provided to assist with remote working

• maintenance of a safe and healthy remote working environment

• data protection, including the practice of good computer security.

This section of the policy can also flag up any financial assistance available, which could include allowances to help employees to pay for internet costs at home, the costs of any additional equipment, and the costs of travelling for days on which they are attending the workplace.
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6. Retain the right to request flexible working

Employers need to find a way for their hybrid working model to sit alongside the traditional right to request flexible working. This section could explain:

• what other types of flexible working are available

• that these types of flexible working remain available for employees to request

• what to do if the employee is not eligible for hybrid working but would like to request it.

The employer can stress that it still operates a separate policy on statutory flexible working requests alongside its hybrid working policy.

nicola.goodridge@goodhr.co.uk or +44(0)7917 878384

Tens of thousands of EU citizens living and working in the UK will be issued with a formal 28 day notice if they have failed to apply for post-Brexit settled status by midnight tonight, 30 June 2021.

Any EU citizen who has not applied to the EU Settlement Scheme by midnight will be classed as an illegal immigrant and could face removal from the UK. Organisations employing EU citizens without settled status, or without claims being processed, could also face severe penalties for using illegal labour, despite having made statutory right to work checks in line with Home Office rules.

With many businesses already experiencing acute staffing shortages due to the pandemic, it is important for employers to encourage any staff who wish to continue working in the UK and have not applied to the EU Settlement Scheme to do so.

Employers who rely on migrant workers, or plan to use them in future, are encouraged to register to become an official Home Office sponsor because businesses and organisations in the UK must be registered sponsor licence holders to employ migrants under the skilled worker route.

It is essential for employers to encourage any staff who wish to continue working in the UK and have not applied to the EU Settlement Scheme to do so. Today…..

nicola.goodridge@goodhr.co.uk or +44(0)7917 878384

This summer people are gearing up for a festival of non-stop sport. Following the 2020 European Football Championships, we then have the Tokyo Olympics. Naturally, a lot of the coverage will be televised during the working day, so what does that mean for employees in the UK? Should they be allowed to watch it, will they, and do they have any worker’s rights?

Officeology, the UK’s leading workplace solutions company, has created a comprehensive guide for companies regarding watching the Euros at the workplace. In this article, they’ve explored whether people in the UK will be watching Euro 2020 during their working day and how employees can support their staff, win or lose…

Will people be watching Euro 2020 during their working day?

We’ve surveyed more than 1500 members of the British public to find out whether they’d be watching the Euros at any point during their workday.

Almost 1 in 4 (24%) of us said they will watch the Euros while at work. While the majority is happy not to tune in, it’s important for employers up and down the country to recognise how keen footy fans are to watch some of Europe’s best players in action.

With England playing Germany in their last 16 knockout match at 5pm on Tuesday the 29th of June, it’s likely that even more will finish their day early and tune in!

The Euros is a great way for employees to unwind during the working day. Especially when working from home it’s super important that people can escape their laptops for a while, and what better way than cheering your team on!

How can employers make the most of Euro 2020?

1. Allowing your employees to watch Euros will boost morale

Boosting and maintaining a great team morale should be at the forefront of any employer’s mind at the moment. The last 14 months have been hard on almost everyone at some point, so what better way to uplift certain employees by letting them relax for a few hours in the day to cheer their team on!

If people are coming into the office why not put the matches on the big screens or encourage football fans in your business to watch the games together!

2. Encourage accountability by introducing flexible working hours during the tournament

One way your team can watch the football, yet ensure that they are still fully responsible for their work, is by implementing flexible working. Introducing flexible working hours means employees will view their responsibilities from a project-based perspective rather than from a day-to-day, or a ‘time’ point of view.

When approaching work from a project-based stance, individual accountability will increase as employees become increasingly aware of what needs to be achieved, rather than how long they should be working.

By encouraging accountability, not only will your staff get to enjoy the football, but it should improve their time management and scheduling skills. You may also see less holiday requests as people don’t need to take one or two days off to watch their teams play!

3. Don’t forget, some people will still do work!

While it’s guaranteed that there will be some sports fans on your team, it’s also inevitable that some people will prefer to just crack on with their work! Those that want to watch may be in the minority – or some people will still work whilst they watch the football as there are admin tasks that don’t require much too much thought – it’s about prioritising and time management!

4. Euro 2020 is a great chance to promote inclusivity and celebrate multiculturalism.

Is there a better way to celebrate than international sporting events? Every company in the UK is likely to have an employee with a significant link to one or more countries participating in the tournament. Euro 2020 is a fantastic opportunity to celebrate culture, with offices even hosting social events when two of the team’s nationalities are playing against one another. People bring in food, drink and have a chance to show their passion for their country – a true celebration of culture!

Do workers have any rights to watch the Euros?

In short, no…but you can ask your boss for time off! It depends on several factors, such as your company policy, as well as your own workload and your relationship with your manager. One possibility is to book a day’s holiday and make a full day of it – however, you may want to reserve it for another time!

What happens if you pull a sickie?

It may seem a little coincidental if you have a sick day at the same time as your country’s knockout Euros match! If your boss knows you well they will probably latch onto your thinking and we’d certainly advise against faking being ill.

Am I legally allowed to watch it at work?

Before you start streaming the game at your desk, it’s best to have a look at your contract or ask your manager whether it’s ok – some internet networks may start slowing down if you stream and it’ll be obvious who the guilty culprit is! If you’re working in the office then some businesses will happily put it on the TV, so no need to sneakily stream!

nicola.goodridge@goodhr.co.uk or +44(0)7917 878384

After over a year of working from home, many employees are, understandably, feeling apprehensive about returning to the office. Others have simply grown accustomed to the flexibility that accompanies remote working and are reluctant to give it up in favour of long commutes and less family time. So, is it time to rethink the way in which your employees work long term?

Should work become more flexible?

The pandemic has proved to many businesses that might have previously felt reluctant to allow their staff to work remotely that a virtual workplace can be successful, prompting calls from many employees to maintain some element of remote working once the coronavirus restrictions are eased.

Can you require your employees to work in the office?

Employers do have the right to dictate terms of working for staff and, should you wish to, you could make it a contractual obligation for employees to be physically present in the office every day. It is worth noting, however, that even when restrictions do cease entirely, there may still be guidance for clinically vulnerable people or pregnant women who are currently unable to have the vaccine, and this may leave some of your workforce still working virtually.

Additionally, it’s probably worth considering whether it’s a good idea to be completely rigid as to how staff work in a post COVID world. For the sake of morale and team working, it may be positive to encourage – or even require – employees to come physically to work a number of days a week, but forcing reluctant workers to be present every day could be counterproductive.

If you completely reject the idea of a blended way of working, your employees might start to become resentful, which could hurt their engagement and productivity. Furthermore, even if you’re not offering flexibility over hours and place or work, the chances are, someone else will be, and staff might start to look elsewhere for employment, which will cost you time and money as you have to recruit and train new team members.

By giving employees some flexibility to choose the way in which they work, you’ll probably end up with a grateful workforce who will be keen to work effectively within your new working structure, which will boost the bottom line of your business and reduce HR headaches. It is worthwhile being understanding of the reasons why employees may not want to return to the workplace and put in place a steady plan to support their transition back to the work environment.

Managing those who are nervous about returning to the workplace

It is important to be mindful of the anxiety that your employees may feel around returning to work; after all, for over a year now the message from the government has been that home is the safest place to work and therefore it’s only natural that some people have built up worries about the workplace and commuting, especially on public transport.

The best way to manage such employees is as follows:

• maintaining an open dialogue with them
• keeping them informed of your timeline towards returning to work
• informing them of the practices you’re putting in place to keep them safe
• investing in additional wellbeing support such as counselling and training
• consulting staff and getting their input into how the workspace will be managed safely.

Blend between office and home working

Depending on the industry in which you work, the likelihood is that most of your staff will opt for a blend between office and home working when we return to the workplace. To ensure that this happens successfully, it’s going to be up to business owners, managers and HR professionals to put in place the necessary structures.

This will include practicalities, such as:

• making sure that employees, whose areas of business are heavily reliant upon each other, overlap
• deciding how many days per week you’re going to need your staff to be in your place of work
• ensuring there are enough resources available (work stations, equipment etc) for the rota that you decide on.

Ultimately, with the right arrangements in place, as well as a collaborative approach between you and your staff and effective communication, you should be able to manage the return to work effectively to ensure an engaged, happy, productive workforce.

nicola.goodridge@goodhr.co.uk or +44(0)7917 878384

This week is Mental Health Awareness Week. Research has revealed that the number of employees reporting mental health worries is up 24% since May 2020.

Numerous lockdowns have resulted in a significant increase in the number of staff reporting mental health concerns over the course of the year – now, more than half (51%) of employees have reported a mental health concern compared to this time last year.

A quarter of employees say their employer has not checked the state of their wellbeing during the pandemic, despite swathes of evidence that shows the crisis has had a detrimental effect on workers’ mental health.

The pandemic has, understandably, had a direct impact on employee wellbeing and specifically on mental and financial health. Tackling this and providing the support needed, even as the majority of employees continue to work remotely, is an area of growing importance for organisations.

What do employers need to do?

The simplest most significant thing an employer can do is to make time for conversations with their staff. Regular check ins, enquiring how they are, how they are feeling, how happy they are on a scale of 1 to 10 is a sure fire first step in the process of creating an open culture where staff feel they are able to talk about their mental health.

Further actions to take include the following:

• Communication: make sure managers have regular one to ones with their team – regularity encourages a deeper relationship which means employees are more likely to open up about mental health issues.

• Keep the conversation going: encourage an open culture where employees feel they can talk about their mental health. Mentioning it once is not going to have an impact. Find multiple opportunities to incorporate the subject into the day to day.

• Workplace policies: introduce a mental health at work policy to ensure staff know the support that is available, the way mental health in the workplace is managed and provide emergency contacts.

• First aiders: introduce mental health first aider training by asking for volunteers from all levels within the company. They are trained to identify signs of ill-health and so will be able spot vulnerable employees and those who may be burnt out. #

• Awareness: if you notice an employee behaving differently ask them if everything is alright. Even if they say they are fine remind them that you are there to help and there are resources available to them.

• Employee assistance helplines: sign up to one of the many companies offering benefits to your staff which usually include employee helplines and counselling…’Perkbox’ is one worth considering.

• Time off: encourage staff to maintain a routine – planning their time and taking their holidays.

• Workloads under control: ensure employees are not working excessive hours and have a healthy work-life balance.

• Positive mental health: encourage positive mental health by arranging mental health awareness training, workshops or appointing mental health ‘champions’ who staff can talk to.

• Training: provide training covering topics such as managing stress, mindfulness and personal resilience, as well as training for managers and senior staff on supporting employees.

• Technology: promote the use of technology for both work and socialising and encourage staff to maintain informal discussions while working remotely….’Slack’ is another one worth considering.

While there have been some really encouraging and inspirational moves from employers to support the mental wellbeing of their staff during the pandemic, we are now facing longer-term stresses that businesses need to prepare for – in particular, the effects of long-Covid and a possible mental health pandemic that could impact our people for a number of years unless we prepare and take action quickly.

We need to embrace impactful, courageous and difficult conversations if we are to support our talent in the new world of work. Making time to talk now could safeguard the wellbeing of our workforces in the future.

To reiterate – regular wellbeing check-ins with staff are a vital way to support your employees’ mental health during the pandemic and beyond and the BEST starting point. I would urge you to adopt this simple practice today.

For any assistance at all email mailto:nicola.goodridge@goodhr.co.uk or call +44(0)7917 878384

Under the off-payroll rules, from April 2021, private sector clients are responsible for determining a contractor’s IR35 status. The decision must be contained within a Status Determination Statement (SDS), alongside the client’s reasoning.

What is the Status Determination Statement?

Under the new rules, the end-client is responsible for establishing whether or not an engagement is caught by IR35 or not. Previously, this determination was left to the contractor’s limited company to decide.

A status determination statement is simply a written statement put together by the decision-maker, the end client, stating the employment status of a contractor following an IR35 assessment.

The statement, which can be created in the form of a document or email, will state whether IR35 applies to their engagement with the contractor (whether the contract falls inside or outside IR35) and offer an explanation on how the deemed employment status conclusion was made.

The SDS shall contain:

• the status decision made on an engagement;
• the reasons which led to this decision.

The end-client must make a determination using reasonable care (see below), and pass this document, plus the reasoning behind the decision, to each worker and every party in the supply chain until it reaches the fee-payer.

Significantly, if any party in the supply chain fails to pass the SDS to the next party in the chain, then they will become the ‘fee-payer’, responsible for deducting the worker’s tax liabilities, and paying HMRC.

What does ‘reasonable care’ mean?

Clients must take ‘reasonable care’ when making employment status decisions. According to the new guidance, all clients must demonstrate that they have assessed IR35 correctly, but HMRC may expect a higher degree of care to be taken by larger companies that have greater resources to dedicate to compliance.

Should the client fail to take reasonable care, they will inherit the IR35 liability, regardless of whether it is the ‘fee payer’ in the supply chain.

How will a client work out your employment status?

Companies will take on the task of establishing employment status in different ways – using internal and/or external expertise. In all cases, they have to be able to demonstrate that reasonable care has been taken to work out the status of each contractor.

They may use one or more of the following methods:

• Official or commercial employment status tools (including CEST – despite its limitations).
• HMRC guidance and established employment status principles, based on case law.
• A professional, qualified advisor.

Importantly, a client can only make an accurate IR35 status decision by looking at the whole picture of the assignment and the way it is carried out – including contract wording and working practices.

What happens if the contractor doesn’t agree with the SDS?

If the contractor or the recruitment agency disagree with the SDS, then the contractor needs to inform the client.

The client has 45 days to respond, but significantly, there is no independent body to act as a referee. The client is under no obligation to change their mind, but they must let the contractor know either way.

If the client doesn’t respond within this time period, they will assume the role of ‘fee-payer’ (if they don’t already do so).

If you would like a template Status Determination Statement or assistance in completing one please do get in touch nicola.goodridge@goodhr.co.uk or +44(0)7917 878384.

In less than a month the new IR35 tax changes will come into force in the private sector meaning some freelancers and the businesses that engage them will have to pay tax differently. The new rules come into force from 6 April 2021 and will apply to services carried out from that date.

What is IR35?

IR35, also known as the ‘off-payroll working rules’, is designed to make sure that in an engagement, which is considered to be akin to an employment relationship, those working through their own companies, and their engagers (the clients), pay the same income tax and National Insurance contributions as those who are employed directly.

What is changing in the private sector?

Under the new IR35 reform, responsibility for determining the status of the freelancer will shift to the end client, where eligible, from 6 April 2021. This is already the case for all businesses and workers in the public sector, where changes were introduced in 2017.

Who does IR35 apply to?

Off-payroll working rules apply if a freelancer provides services to a client through an intermediary (usually their own company, in other words ‘a personal service company’), but would be classed as an employee for tax purposes if they were contracted directly.

If the rules apply and the freelancer is deemed to be inside IR35, tax and National Insurance contributions must be deducted by the end client from the freelancer’s fees and paid to HMRC.

IR35 applies on a contract by contract basis, so some contracts maybe inside IR35 and some maybe outside IR35.

Inside IR35

The freelancer pays the same tax and National Insurance as they would if they were an employee. The end client will be required to pay the necessary tax and NIC.

Outside IR35

Nothing changes. The freelancer is paid a flat fee as normal and is responsible for managing their own taxes.

Who decides the freelancer’s IR35 status?

Responsibility for determining status as inside or outside IR35 will lie with the end-client under the new legislation. This means the business using the freelancer’s services will be responsible for deciding their employment status.

However, if the freelancer is working with a ‘small company’ (turnover of £10.2m or less, balance sheet total of less than £5.1m and less than 50 employees) nothing changes – responsibility for checking their status vis a vis their end client remains with the freelancer (as it does now).

New rules will apply to parent companies, so larger businesses won’t be able to setup smaller companies to avoid paying contributions where a freelancer is deemed inside IR35.

Three tests to determine status

The way the freelancer’s status will be judged by the end client – and HMRC – will remain the same, namely the three key factors which determine employment status, or not, as follows:

1. Control

• Who has control over how the work is completed?
• Who has control over the working hours or the location of where the work has to be done?

If the answer is the end client (the business engaging the freelancer) then the freelancer maybe inside IR35.

2. Mutuality of obligation

If the end client company is obliged to give the freelancer more work once they have finished a task or project, then they maybe inside IR35.

The freelancer contract should be specific about the work that will be carried out in the project, and it should not imply any automatic renewals of the services, nor should there be any expectation that they will continue to be paid if no work is available.

3. Personal Service

Does the freelancer personally have to complete the work that they have been engaged to do? To be outside of IR35 the freelancer needs to be able to demonstrate that their personal service is not a requirement of the engagement and ideally they have a genuine right to send a substitute.

Sole trader freelancers are not impacted by IR35

It is also important to bear in mind that IR35 only applies to individuals operating through their own limited companies. If the freelancer is a sole trader, the IR35 legislation will not have any impact. However, the end client will still have to decide on the employment status (employee, sole trader or a worker) in order to ensure it does not fall foul of the HMRC – and this has always been the case….

The way ahead

It is essential to remember that genuine freelancers and self-employed workers will not be affected.

Whilst limited company freelancers (unless working with ‘small’ companies) will lose the right to set their own status, they are not powerless – they can have their contracts reviewed by us at GoodHR, discuss reform with their end client or obtain a Confirmation of Arrangements as to the true nature of the working relationship.

However, engagers are likely to take a safe approach which will lead to many more freelancers being taxed under PAYE than needs to be the case – including those that could safely operate outside of IR35 if some time and effort was given to setting up the correctly worded contract and assessing status.

Essential to have a correctly drafted freelancer agreement

Invest time and energy now to put the processes in place to help you hire the freelancers you need, when you need them, with minimal tax and legal risk or fuss, and you will reap the benefits of being able to utilise a flexible workforce when things pick up.

The freelancer contract must be carefully drafted. However, it must reflect the actual working arrangement because contractual amendments that are simply window dressing and not a reflection of the true agreement between the parties could rightly be dismissed by HMRC as a sham.

Freelancing isn’t dead, it’s a vital part of our long-term future.

Every business should of course look to be fully compliant around IR35. But they should do so in a way that doesn’t restrict their ability to react to changing needs.

If you’re unsure about whether your contract will be considered inside or outside IR35, it’s advisable to speak to Nicola Goodridge : nicola.goodridge@goodhr.co.uk or on +44(0)79178783.