Interim Market Update - May 2021

We are continuing to see a strengthening of the Procurement and Supply Chain Recruitment market, led primarily by increasing permanent recruitment activity. Interim market growth appears slightly less robust at this time; the introduction of the IR35 Off-Payroll legislation has presented significant challenges not just for organisations needing to secure interim procurement and supply chain support, but also for the established Interim Specialists providing these services.

 

The need for an agile Procurement and Supply Chain workforce is we believe as great as ever, particularly as organisations try to recover from the challenges of the pandemic and Brexit combined; we see the underlying demand for talented Interim procurement and supply chain resourcing remaining solid.

 

However, the introduction in April of the IR35 Off-Payroll legislation is resulting in a distorted and less visible interim market, with organisations appearing to move away from the traditional ‘day rate’ limited company contracts in favour of other options. In a nutshell then:

 

 

We have seen a large shift from traditional interim ‘day rate’ roles to Fixed Term Contracts (FTC) to a point now where most interim contracts (in what was once the £400 to 700 per day band) are being outnumbered by those on an FTC basis. With the postponed Off-Payroll legislation introduced in April this year, nearly all of our larger clients have now put in place risk-mitigating IR35 policies; we have seen a major shift toward the use of Umbrella companies and more surprisingly, the Fixed Term Contract amongst many of our major clients. From the client side the benefits include the mitigation of any tax liability and reputational risk associated with IR35 non-compliance.

 

On the negative side there is the additional administrative burden associated with getting someone on your payroll for a short period of time, the increased headcount; and the need for increased focus on your medium-term resource planning. More than ever, interview and onboarding processes need to be proportionate and robust enough to ensure your FTC interims fit with your objectives and team.

 

 

There has been a period of market adjustment amongst Interim Contractors, many of whom would previously not have entertained a fixed term contract but are now having to be more flexible to secure work; often with a reduction in their overall earnings. For many contractors the effective removal of the personal service company (PSC) with its tax benefits, has had a significant impact on their take-home remuneration, and the need to secure challenging and consistent ‘deployment’ has resulted in them finding permanent senior roles, where available. There is no doubt, for many traditional interim specialists now working on fixed term contracts or through reputable umbrella companies, there has been a significant reduction in their net earnings; market rates are still settling as interims and employers come to terms with April’s Off-Payroll legislation.

 

 

Most companies have not significantly adjusted rates yet to address the reduction in take home pay that the extra tax those contractors deemed inside IR35 are having to pay. Unfortunately, it many instances it would appear to be a ‘like it or leave it’ approach. We do try hard to open conversations between parties to ensure both the contractor’s and client’s needs and budgets are best equated.

 

The few clients that have managed to determine that their roles fall outside of IR35; or have defined work on a Statement of Works Contract, are likely to get a better response rate and thus, a better choice of contracting talent.

 

As the market gets busier and becomes more candidate led, we anticipate companies will face upward pressure on rates however, to ensure they secure the level of interim procurement and supply chain talent required.

 

 

Overall, we are seeing the Interim market gently strengthening; and we expect to see this trend continuing as we move out of the pandemic into growth. A flexible and skilled procurement and supply chain interim resource is a critical contributor to business growth and success, particularly in a fast-changing post pandemic-influenced economy. Unfortunately, the recent Off-Payroll legislation has not helped either businesses or self-employed interims maximise these opportunities.

 

The market is still trying to find its equilibrium, adjusting to the new regulations and thus we have seen a significant move in favour of Fixed Term Contracts, which has meant traditional ‘day rate’ roles are in short supply.

 

It will be interesting to see how the modified interim market matures over the coming months and indeed how the FTC, Umbrella and traditional PSC options develop.