Revised IR35 rules delayed until April 2021

For the private sector, the delay means that responsibility for determining the deemed employment status of workers provided via “IR35” intermediaries remains with the intermediary irrespective of the size of the end-client.

However, Mr Barclay was clear that this is a delay and not a cancellation and, therefore, medium and large private sector entities will need to revisit their use of such workers in the near future. Undoubtedly, COVID-19 will itself cause businesses to reflect critically on the value of all types of contingent workers and, likewise, for such workers to reflect on the value of employment. For the public sector, the existing legislation will continue to apply.

The key changes for public sector entities that were to be introduced from 6 April 2020, were: 

• widening the definition of “public authority” to catch companies connected with public authorities but that are not wholly owned by one or more public authorities;
• introducing a requirement to give a “status determination statement” including reasons, to both the worker and fee-payer (for example, an agency the client contracts with); and
• introducing a requirement to implement a client-led disagreement process.   

The second and third requirements broadly feature in the existing legislation but in a far less prescriptive form. Under the existing rules, public authorities must inform the intermediary (rather than the worker and fee-payer) of its conclusion as to the worker’s deemed employee status before the start of the contract or provision of services.

There is no requirement to give reasons for its conclusion. The conclusion can be written into the contract or given separately. Additionally, the public authority must respond to written questions from the intermediary within 31 days of receipt. There is no requirement to respond to questions from the fee-payer. The pubic authority is treated as the employer only if it fails to inform the intermediary of its conclusion or reply to the intermediary’s questions within the prescribed time limits, or if it fails to take reasonable care in reaching its conclusion on deemed employee status.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2020. Specific advice should be sought for specific cases. For more information see our terms & conditions