IR35 – The role of the Hiring Manager is changing

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As activity begins to pick up speed to prepare businesses for the extension of IR35 into the Private Sector in April 2021, it’s becoming clear that the role of the Hiring Manager is changing.

It’s not uncommon for managers looking to recruit staff to lean on their HR team for support – or perhaps their outsourced partner. Whilst they’re keen to be involved in defining the job description and meeting the candidates, there is a great deal of paperwork required to ensure compliance – which many Hiring Managers may not have the legislative knowledge or confidence to complete. When new recruits are to be engaged on a temporary basis to support short-term projects, focus tends to concentrate around their skills and ability and less about meeting face-to-face to assess aspects such as cultural fit – making it easier to delegate the majority of the hire process to the recruitment experts.

IR35 however throws a challenge into the recruitment process – because it will be the responsibility of the Hiring Manager to determine a Personal Services Company (PSC) contractor’s IR35 status. Fundamentally this is because the person making the assessment will need an adequate level of understanding of how the contractor will undertake their tasks whilst providing services to the business. The HR team or outsourced partner will not necessarily know first-hand whether they can provide a substitute to deliver work in their absence or whether they will be managed the same as directly engaged permanent personnel.

“IR35 means Hiring Managers will now need to fully understand legislation that before they may have relied on recruitment experts to support them with.”

– Richard Hanson, Linx Client Services Director

Hiring Managers will need to feel confident enough to make these determinations that will potentially have financial and legal implications if not managed correctly – exposing them to a great deal of risk.

To ensure IR35 compliance HMRC will be looking for evidence that Hiring Managers have received the appropriate training to make status determinations, and that they fully understand the legislation.