Lloyds Bank has become the latest organisation to end the practice of engaging with contractors through intermediaries. Proposals are to either discontinue using contractors or insist that they engage with umbrella companies from which the bank will have an agreement with the umbrella company.
This move follows an earlier decision by Barclays bank to impose a ban on engaging any workers through Intermediaries, instead the bank has made the blanket decision to move all workers onto PAYE.
Many will not be surprised at these conclusions but it could be an alarming indication of what is to come as more large organizations decide that trying to navigate through the complexities of the IR35 legislation (Off-Payroll working) soon to be introduced to medium and large sized employers is just not worth the risk of getting it wrong.
In the lead up to the change in the Intermediaries legislation effective for engagements on or after 6 April 2020 we could see many more large industries introducing changes to policies on engaging individuals under the Off-payroll working rules. In some cases, such as with Barclays Bank, to counter the move, they will introduce rate increases where feasible to retain key skills.
Whatever decisions are made businesses could either see a decline in the numbers of workers willing to transition to the new payment process or employers may have to factor in extra costs to entice workers into remaining in the position.
