Times are tough for many businesses at the moment, as the economy is slowly opening up after the COVID-19 pandemic – although there are some encouraging green shoots to be seen. Agency staffing body, the REC, reported that the demand for IT contractors, for example, continued to rise in August for the fourth month in a row.
However, this comes as no surprise to us. With years of experience in the data sector, we have seen first-hand that the contract market is often the first market to come back. It does seem more pronounced this time, maybe due to the uncertainty that is still hanging around the virus – and also the risk associated with a no-deal Brexit.
There is also a large backlog of candidates on the market – with the REC again reporting availability of contractors being at its highest level since 2008. We put this down to the fact that there have been several months now of a much higher volume of contractors finishing roles rather than starting them – again due to the unpredictability around the COVID-19 pandemic.
All of this seems positive news for contractors, but there are still concerns around a potential second wave of the virus causing lockdown measures to be put into place again. This coupled with the winding down of the furlough scheme and the scepticism around Brexit means that there could still be challenging times ahead for IT contractors.
The UK’s flexible job market has worked out well for many during the past few months, giving people options during a time of crisis. Some data workers have found it a quick way to find work and earn money, while others have used it as a stepping stone to a more permanent role.
There are major benefits associated with contracting, such as the ability to work with a wide range of clients on different challenges, and in the past, there were also many ways that an accountant could increase the amount of money contractors received at the end of the year.
There are also downsides to contracting as well. There is a myth that it is easier to change career directions as a contractor than an employee, but this isn’t always the case. We have worked with many companies who want contractors who have ‘been there, done that’. So while you may get to join a company at the point they are dealing with an exciting new project, you may also get stuck doing something that you know really well – rather than trying something new.
There is also the headache of IR35 to consider. IR35 was introduced to tackle the problem of ‘deemed employment’ (businesses engaging workers on a self-employed basis rather than under employment contract – so they become ‘disguised’ employees.) If a contractor is operating outside of the off-payroll regulations imposed by IR35, then potentially their net income would be reduced by up to 25% and cost them thousands of pounds in additional income tax and National Insurance contributions.
IR35 has only been applied to public sector bodies up until now, but the changes that are coming into effect next year means it will also cover the private sector as well. Many contractors who have moved into the private sector in order to avoid the implications of IR35 are now confused about what to do next.
It’s not all doom and gloom though. Our knowledge of the data recruitment market leads us to believe that there will always be a need for highly-skilled, capable IT professionals to fill tactical gaps for companies – that for whatever reason they cannot fill with existing staff.
There will, of course, also be those contractors who are worried about being categorised as an IR35 risk, and so decide to take the leap into permanent employment.
Whatever your preference, be it a permanent role or carrying on life as a contractor, our expert team is here to help. We would love to hear from you and are more than happy to chat through your options to make sure we find the right role for you. Please email us at email@example.com