Collective bargaining Collective bargaining
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  1. #1

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    Default Collective bargaining

    The threads here are starting to come alive with the actions of the larger end clients and their intermediaries. Some banks have said "no more contractors", some are reportedly looking at options (although it seems that this might actually be their agency and not the bank), some will no doubt make their policy decisions much more quietly.

    The common theme here though is that the end clients and the intermediaries will make decisions and contractors will be required to abide by them. In other words, the assumption is that contractors will be supine and are willing to be led by the nose into the new world with no regard for their thoughts, views, preferences but usually being left with the financial consequences of decisions they have had no input into.

    Why?

    I understand that the end client is ultimately paying all the parties in the chain and as such has (or should have) a major influence. I have heard clients say that they so desperately need the job that they will do pretty much anything they are asked to in order to get it and keep it. I have heard others say that their skill set is valuable and that end clients can (and do) pay premium rates to get that person and keep them.

    So I understand that the end client/contractor relationship is a complex one that goes beyond simple supply and demand. This nexus will change forever once IR35 reform has bedded down though and true contractors outside IR35 post April will I think have a greater weight to their position in any negotiation.

    The present crop of agencies, recruiters, PSC accounting firms are all facing major changes in their business model. The objective of the reform is to reduce the number of contractors. HMRC say by 90%, commentators here and elsewhere consider that target to be ambitious and perhaps unrealistic, but even a 50% drop in numbers will be catastrophic for intermediaries.

    Some will go under. Some will seek new business models (service companies, SOW, etc) which will prop them up for a while but I am convinced that HMRC will be looking to use their IR35/MSC/AWR weapons to investigate all such models. The weaker models will not be able to withstand that review and will fail.

    Umbrella firms are coming under pressure to be more transparent- and rightly so. These threads are full of warnings about umbrella practices that are perhaps less than honest. Amongst the umbrella community, it is obvious that the majority of the better known names are aware of this need and are complying with the need to be clear and open with clients, to a greater or lesser degree. I think we will see this continue and many of the umbrella firms who misuse that name will be dragged into the light - or will close.

    Advisers in the accounting/tax worlds will see a change in role as well. Whilst I am sure that some will continue to offer schemes and structures that are claimed to be "compliant", "approved" and "never challenged", it is to be hoped that a wiser contractor population will be better equipped to separate fact from fanciful fiction.

    The old models of how this sector works are (in my view) destined to disappear. Pressure from a Government hungry for revenue, changing employment law, etc, will force change.

    Individual contractors have a once in a generation opportunity to shape the market they work in.

    The power of the end client and the intermediaries is still there but is will be reduced as the reforms bite.

    In a market worth billions of pounds, those entities will seek to re-shape the business models to protect their position. If that new model sees fewer contractor posts and a refusal from end clients to increase rates, then intermediaries will increase fees and seek to impose them on individuals.

    Contractors can and should realise that for a few months, perhaps until the end of 2020, they have an increased influence on how contracting will look and act for the next 10 years.

    Contractors can and should realise that they are not supine and should not accept without hard questioning, new business models that many will seek to impose on them.

    Will they?

    History says not.

    There is opportunity for contractors to organise and direct what THEY want.

    For example it was suggested to me by a party known in this website that some form of "kite mark" granted by an organisation working for contractors (and not intermediaries) to "approved" umbrellas, agencies, recruiters, end clients even, would be a good idea.

    I agree. I also however think that such an organisation is a lot of work for whoever puts it together and runs it, will require funding and staffing and resources, would have real difficulties in staying true to its purpose.

    The biggest challenge however is the apathy of contractors.

    Despite the slings and arrows of outrageous fortune that many contractors have suffered over the past two decades, there is no appetite seemingly to seize even a modicum of control over their own destiny. No desire to dictate terms to intermediaries. No willingness to "rock the boat".

    The period of market reform we are now in is the perfect opportunity to grasp the nettle and at least start moving towards a fairer, more transparent and ultimately safer (financially and in matters of physical and mental health) goal.

    A contractor owned and controlled entity needs to be the catalyst for this.

    And yes, we see a model that is some of the above in our own Big Group. The Big Group is not however aimed at the above problem and whilst it may serve as a template, it is not entirely suitable.

    We see perhaps a better prototype in how LCAG was formed around a single issue. I can safely say however that the group was formed and retains its purpose by dint of hundreds of hours of effort from a relatively small group, juggling their own jobs and lives alongside the LCAG work.

    Whichever model is used, failure of contractors to take some control and shape their own destiny, NOW, will result in commercial intermediaries and end clients increase their power at the expense of individuals.
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  2. #2

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    Wow. That was a long read. Almost a TL;DR

    The common theme here though is that the end clients and the intermediaries will make decisions and contractors will be required to abide by them. In other words, the assumption is that contractors will be supine and are willing to be led by the nose into the new world with no regard for their thoughts, views, preferences but usually being left with the financial consequences of decisions they have had no input into.

    Why?
    Because we are suppliers and the onus is on the clients/agents to shore up their engagement process to bring us on like a proper supplier of services? Does TCS/Oracle or whoever have a say on how they are engaged by any organisation they approach? Do they have a chance to change the process to suit themselves?

    If they don't there will be consequences which won't be in their favour and if it isn't and they accept the risk then so be it. A couple of clueless random contractors trying to save their bum on seat position at a particular client is hardly the answer to the problem.

    The clients/agents come up with a model that makes us look like a business and outside IR35 and we continue to apply for the roles and deliver services like we do. Is that being led by the nose? If so then that's the way it is. Nothing wrong with that. Obviously we hope they will listen to our needs to make sure the process works for all and there is an assumption they won't put something in place that just doesn't work for us but then if that's the case they've completely missed the point and wasted their time which I doubt many will.

    I remain to be convinced how a gaggle of contractors can make much of a change to this bearing in mind the number of people already involved. This impacts more than just us, agents, accountants, contractor service suppliers so have that added weight.
    I don't think you can compare this situation to LCAG. The people affected, the reasons, scope and impact are very different.
    Last edited by NCOTBAC; 4th July 2019 at 10:24.

  3. #3

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    Quote Originally Posted by NCOTBAC View Post
    Wow. That was a long read. Almost a TL;DR

    Because we are suppliers and the onus is on the clients/agents to shore up their engagement process to bring us on like a proper supplier of services?

    The clients/agents come up with a model that makes us look like a business and outside IR35 and we continue to apply for the roles and deliver services like we do. Is that being led by the nose? If so then that's the way it is. Nothing wrong with that.
    Thank you for reading it.

    You make a case for the status quo and there is perhaps something to be said for that - so long as you trust the parties around you to be fair, honest and transparent. History suggests that a significant proportion of those parties has shown themselves to be less than that.

    I've selected a few of your comments to respond to. I hope I have retained their context.

    The "onus" for those you engage with is to make terms that suit them - not you. What I'm saying is that you have an opportunity to shape those terms and if you fail to do so, complaining later is pointless.

    The description of how a client/agent can impose a model on how you deliver services, simply to "make it look" like an outside IR35 business, is precisely the sort of dangerous activity that led to two decades of HMRC enquiry. I might even go so far as to say that blind acceptance of a model that is designed for and by a client/agency is unwise. Not only are you accepting a model that is designed to benefit others, but there are no guarantees that it will not result in liability falling upon you for tax and perhaps other matters.
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    Wasn't it once called the PCG?
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  5. #5

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    All for a small donation, right? I'm sure you're well-meaning, but IR35 isn't really your area, according to you.

    It's hopelessly late in the day and it will be hopelessly under-powered and unfocused (we're talking about contractors here ). Big organizations are implementing their plans right now. We've heard from financial services because of their risk structures and the rules surrounding SAOs, but other sectors will be enacting things imminently. Ultimately, unless the new PM takes a completely different approach, which is highly unlikely, BoS contracting is probably dead, and no amount of lobbying or contractor circle-jerking is going to save it. What remains will be a large number of employees, whether permies or, more likely, FTCs, and a small group of specialist contractors that do project-based work and have always been outside and will continue to be outside. Where the line is drawn between the two will not be influenced by some Big Group cover band but market forces.

    Also, the PCG called from 1999 and wants its business model back.

  6. #6

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    Quote Originally Posted by NotAllThere View Post
    Wasn't it once called the PCG?
    Precisely.

  7. #7

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    Interesting points.

    I think that you don't have to be an IR35 specialist to see that contractors, having been exploited and preyed upon by scheme promoters, because IR35 in 1999 created the conditions for that happen, are at risk of the same thing happening now.

    I am aware of the reason and history of the PCG. When IR35 first arrived I was working in the tax department of a large bank which engaged contractors and we had a number of discussions with those behind that effort. I am aware that the group has since evolved.

    It may well be that they are the perfect host for the ideas I put up. If so, then as you say, the financial entities are laying out their stall and now is the time to be making some noise.

    Unfortunately I fear nothing will happen and many contractors will once again sleep walk into situations where they are carrying far more risk than they realise.

    You are also correct that IR35 - in forensic detail - is not my area. I suspect however that even I know a lot more about it than the average HR staffer in Mega Bank Plc, who will be making decisions on this.

    So my point remains. We will see key decisions being made by those ignorant of the rules; endorsed by intermediaries with their own agendas; policed by HMRC seeking to maximise revenue. The only group without a voice is the contractors.

    I'm not suggesting that such a group will be able to hugely influence the final outcome, nor be able to change the policy of corporations, but if you have already given up and decided that you are content to be a pawn in the hands of others, so be it.

    As to the "small donation" jibe, I have already explained that none of the platforms we have or are planning will be able to organise and execute this idea.
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  8. #8

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    The key decisions on IR35 have always been made by those ignorant of the rules. HMRC are ignorant of their own rules.

    The power of lobbying in this area has always been massively oversold and the degree of continuity between administrations has been as remarkable as it has been unsurprising.

    You’ll excuse my scepticism about your own motives, webberg. I expect they are mostly sound, and I am not trying to single you out for criticism, but you freely admit that you’re another one of the “hangers on” that makes a living from contractors, which is fine; you offer a service. But vested interests have always been part of the problem w/ IR35.

    My view is that a minority will continue to operate outside IR35. A majority won’t, and contracting as a whole, including the “hangers on” will need to get used to that pretty soon.
    Last edited by jamesbrown; 4th July 2019 at 16:09.

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    I think that you don't have to be an IR35 specialist to see that contractors, having been exploited and preyed upon by scheme promoters, because IR35 in 1999 created the conditions for that happen, are at risk of the same thing happening now.
    Interesting you are linking this to schemes. Admittedly I've not been affected by this and am aware you've put a lot of time and effort championing this but IMO I'm struggling to bring that in as relevant to the current situation. Maybe I'm being shorted sighted and am not looking out for those that would fall into these but I don't think I'm the only one that's not really thinking about this aspect. Just my honest thoughts.

    Apart from that group I don't think a vast majority of contractors think we've been exploited by IR35.

    My view is that a minority will continue to operate outside IR35. A majority won’t, and contracting as a whole, including the “hangers on” will need to get used to that pretty soon.
    I must admit I'm a little more optimistic than this. I'm aware a number of large recruiters and some big names using contractors in the Manchester area are putting time and effort in to this to get it right. I'm sure many smaller outfits won't but I'm thinking it's going to be a bit better than some think. We said the same about the PS but there are plenty of outside roles and even some of the inside ones are still attractive to local contractors.

    It's gonna be messy on the run up and for a little while after but I don't think it will be the end any more.

    Edit. And I also have to apologise as I also read the first post as sales patter and was wondering where it was heading.
    Last edited by northernladuk; 4th July 2019 at 16:30.
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  10. #10

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    @webberg ... but you do sound awfully like Andy White in your first post. (I was at the inaugural meeting that led to the PCG).
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