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Contractors should seize Brexit opportunities, urge contracting stakeholders

Contractors can expect opportunities as well as challenges to arise from the UK’s decision to leave the European Union (EU). Following the Brexit vote, contracting’s stakeholders are urging contractors to seize these opportunities to ensure a positive outcome for their careers and the UK’s highly skilled flexible workforce.

“Where there is change there is always opportunity,” highlights ContractorCalculator CEO Dave Chaplin. “Leaving the EU is a massive one-off project that will impact on virtually every client organisation in the UK. This is exactly the sort of project that contractors are best at.”

Chris Bryce, CEO of the Association of Independent Professionals and the Self-Employed (IPSE) agrees: “IPSE believes this new era can and must be taken as an opportunity for the UK. New circumstances always bring new opportunities for freelancers. We should be optimistic about the future and IPSE will continue to push the importance and value freelancers bring to our economy.”

Even at this early stage, some contracting stakeholders are demanding key changes to tax and employment legislation, with IPSE already calling for the proposed changes to how IR35 is implemented in the public sector to be dropped.

How will Brexit impact on contractor demand?

According to Freelancer and Contractor Association CEO Julia Kermode: “Leaving the EU will undoubtedly bring a period of uncertainty and as we have witnessed in the run up to this referendum demand for contractors has been high and I see this demand increasing particularly if the rules on immigration tighten up”

“However, it should be borne in mind that exit will not be instant, stability is needed and now more than ever it is important to ensure that firms have the right skills in place.Once again, the flexible workforce will be key in ensuring the UK's economy doesn't suffer.”

In contrast, Recruitment & Employment Confederation (REC) Chief Executive Kevin Green notes: “Our data has shown a slowdown in hiring as we approached the Referendum. We expect to see this period of uncertainty continue.”

Chaplin’s view is that this uncertainty is not good for employment and employees but is positive for contractors: “Contractors are a low risk alternative to employees during uncertain times, as we witnessed during the 2008 recession when contractor demand increased.”

Will contractors benefit from relaxed regulation?

The Association of Recruitment Consultancies believes that whilst contractors should expect no immediate change, leaving the EU and the jurisdiction of the European Court of Justice (ECJ) may benefit contractors in the longer term.

“There will be no change in our legislative make up until Parliament decides to amend or repeal the European Communities Act, which was the enabling Act that facilitated our entry into the EU constitution in the first place. Also, Parliament has to decide when to give effect to Article 50, namely give formal notice of termination to the EU. These steps may not happen for some considerable time.

“Once we are actually out of the EU, the European Court of Justice (ECJ) will no longer in effect be the ultimate law court and arbitrator of decisions affecting the UK. This is relevant. Recently the ECJ has made some perplexing decisions. For example the ruling that holiday pay must be provided taking into account commission.”

Public sector IR35 proposals should be immediately dropped

As Bryce explains: “While we are renegotiating our exit, it is not a time to change how our public sector operates - the Government's proposed changes to IR35 should now be dropped completely.”

And Chaplin notes: “Every public sector body has a huge task ahead of it, so now is not the time to enact any IR35 changes in the public sector. Contractors being treated as disguised employees will just put their rates up or, more probably, refuse to work in the public sector at a time when highly skilled contingent workers will be in greatest demand.

“Despite his post Brexit speech, George Osbourne is unlikely to remain as Chancellor, so we can only hope that his replacement will understand the damage any further IR35 changes will bring.”

Brexit may affect contractor finances

Contractor financial adviser Contractor Financials suggests that Brexit may have a short term impact on some financial products but the fundamental approach to long term pensions, savings and investments should not change.

Contractor Financials’ research shows that mortgages are likely to be affected in the short term, as the cost to lenders of funding their mortgage portfolios increases as a result of Brexit-induced market volatility. There is likely to be a very short window for contractors seeking to benefit from the current historic mortgage interest rate lows before rates rise driven by uncertainty.

Depressed global financial markets may also result in increased premiums on life and other protection products. However, except for contractors with particular short term goals, depressed financial markets are unlikely to impact on longer term financial planning.

“Despite the uncertainty, the fundamentals of investment still hold true,” says Contractor Financials. “Investments are a long tem game and short term losses shouldn’t necessarily drive contractors to substantially change their investment approach.”

Contractors must seize the opportunities Brexit offers

Green highlights that access to the right skills will underpin the UK’s continued growth and prosperity: “We need to ensure that British businesses continue to be able to get the people they need to fill the jobs available. Access to talent is absolutely vital to sustainable economic growth and prosperity.”

“New circumstances always bring new opportunities for freelancers,” notes Bryce. “The flexibility and agility of this sector has always been one of our greatest strengths. You could say, the world's our oyster!”

Chaplin concludes: “The flexible workforce is going to be a key pillar supporting all UK public sector organisations and businesses through the transition. Now is not the time to shackle them.”

Published: 27 June 2016

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