Lloyds Banking Group has decided to either scrap contractors or force them in to umbrella companies, a move that has been dubbed as “bad for contractors and bad for business”.
The Association of Independent Professionals and the Self-Employed (IPSE) is warning other businesses to not follow suite and said this move “could not only harm the self-employed, but also long-term flexibility and productivity.”
At the same time, work-life balance charity, Working Families announced Lloyds as one of the top 10 family friendly employers in the UK due to their flexible and family friendly policies.
Also, just yesterday, the Office of National Statistics (ONS) announced that April – June 2019 saw UK productivity fall at its fastest rate in five years, as it dropped by 0.5 per cent.
Contractors who work for Lloyds will either be moved onto pay as you earn (PAYE), work through umbrella companies which will result in a pay cut of 30 per cent or stop working there altogether.
Andy Chamberlain, IPSE’s deputy director of policy, said:
This is a short-sighted and extremely damaging decision – and not just for the self-employed. It will be bad for contractors and bad for business.
IR35 is impossibly complex, and for a long time, we have warned the Government against forcing this complexity onto businesses across the UK. The risk is that they will panic, as Lloyds seems to have done, and harm the self-employed and the wider economy.
The self-employed are an enormous asset to UK businesses and the economy as a whole. They provide businesses with invaluable flexible expertise and, as a result, add over £275 billion to the economy every year. Decisions like this risk undermining that immense value.
Perhaps worst of all, this may just be a taste of things to come when the changes to IR35 come in to force next April. We urge the government to halt and rethink this dangerous policy. Now, facing an uncertain economic future, this country needs the flexibility and dynamism of the self-employed more than ever, and the government must do more to support them.
The motive behind this move is to circumvent the IR35 regulations which will come in to effect in the private sector in April 2020.