IR35 – The time is now for employers in the oil and gas sector

Offshore workers arrive on their platform by helicopter
Offshore workers arrive on their platform by helicopter
Opinion by Mike HarperGlobal Sales Director, Singular Resource Solutions

With the North Sea in the midst of a resurgence, there’s a slight temptation for some in our sector to forget a few of the smaller things that are going on. But the recent UK budget saw a call-to-action for the oil industry.

IR35, the tax regulation which clamps down on workers disguising themselves as ‘self-employed’, will extend from the public sector to the private sector in April 2020.

And so what? Well, if you’re an oil and gas employer, you’ll be well-aware contract work is an industry norm, but as the government clamps down on a long-standing problem, what’s the best way for employers to adapt? Here’s a few tips:

o Act now – With only three months to prepare for IR35 once it was announced, the public sector understandably took a blanket approach to the regulation, covering all associated costs (i.e. national insurance contributions) for workers. However, this included those outside of IR35. Whilst this was a quick fix, it was a costly one too. For the private sector, the April 2020 deadline allows a more measured approach in assessing those who actually fall under the regulation. The only challenge for them now is guarding against complacency, which could lead to them suffering the same fate as the public sector.

o Evaluate your entire business – It’s so easy for oil operators to look to their rig operators and other offshore workers, but IR35 extends much deeper than this. What about HR? IT? Finance? Sales? All of these departments can include unassessed contractors who could leave you vulnerable. This isn’t always the easiest issue to judge and can be quite time-consuming, but that’s where third-party providers come in. Their expertise in managed service solutions ensures no stone is left unturned and given this is such an important topic, it’s vital the right guidance is in place.

o Develop a long-term strategy – IR35 is far from a quick fix— it is a regulation that needs continuous management for compliant implementation. New projects will arise requiring new skillsets and consequently, new hires. With all of these changes to monitor, established processes need to be put in place to manage against the potential risks of employing incorrectly certified ‘self-employed’ workers. As the legislation is limited to medium and large businesses, some organisations are bound to have an in-house tax, legal or HR specialist to help them with this. But for those that don’t, outsourcing to specialists, such as manpower providers, offers reduced compliance risks and a detailed analysis of recruitment processes. IR35 is a complex regulation to implement as it is—it’s no use falling afoul of these due to an administrative error. Ultimately, by making the best use of a specialist, in-house or outsourced, companies can have a robust process in place to determine if a potential employee falls inside or outside of the IR35 regulation.

For the North Sea to continue to move forward, the right personnel with the right skills will be essential. It’s well-known that there’s a global talent shortage in the oil and gas sector and with IR35 on the horizon, the challenge will be to not only retain employees but attract new faces. This new regulation has been designed to improve the sector rather than hinder it but for employers, its ultimate impact lies in the speed of their response, which must be sooner rather than later.