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Comment by jakub_g | Hacker News Reader

Now it would be interesting to see the opinion of the court on fake IT contractors (SSII), where as a developer you are a full-time employee of company X, rented for years as full-time "consultant" to company Y, on premises of company Y, just with lower salary and no profit sharing & no bonuses that staff of company Y enjoys.

(This has been a common practice of Microsoft in US in 1990s and they lost a lawsuit on that. In France, this is still an open secret and a way to milk junior developers. The markup those contractor companies make is crazy.)

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Without even getting into the whole crappy world of SS2Is and "ESNs", a lot of the actual software contractor work in France could also be requalified as employement.

Most often, clients pick your hours, where you can work, assign you what would be a regular job, with very low autonomy on the tools you can use and how you can do things, along with half-year, sometimes more, renewable contracts, and a contractual interdiction to subcrontract in the work.

But most freelancers just don't seem to want to be actual employees, and prefer the higher pay and ability to leave on short notice. Perks that can only hold as long as the talent shortage.

The UK HMRC has just absolutely devastated the London contracting market due to a rule shakeup like this. Speaking as an ex-contractor and current hiring manager, the result has been disastrous.

Salaried devs in London are drastically underpaid, contractors make up the difference. Hopefully this will at least push up the salaries to a more reasonable level.

Its going to be interesting when the civil service contractors now being treated as FTE's Say:

"oh so about my civil service pension then, and all those years you owe me" Big Juicy Smile

What were the changes and it's negative results you observed?

They moved responsibility for determining whether a person is acting as an employee or a vendor in the vast majority of cases to the client, who must demonstrate a bunch of factors (I'm not a tax guy), not least

- the "vendor's" right to substitute himself for a replacement they subcontract (via employment or otherwise) to, irrespective of the client's deemed suitability of the chosen replacement

- the "vendor's" right to a significant level of autonomy, such as the ability to choose their working hours and lunches, and have high level control over their workflow

- the process of determination 'employee' vs 'vendor' must be significantly documented and can be challenged in retrospect for years after completion of the contract

Falling on the wrong side of a determination could leave the client liable for mandatory national insurance and pay-as-you-earn tax deductions. Now HMRC need not prosecute individual contractors, but instead clients (who may hire hundreds of contractors), making the enforcement process much more efficient for them, and much higher risk for the clients.

Net result for companies: building big overnight temporary teams out of contractors e.g. for 6-12 month projects are vastly less likely to do so, for fear that at some future date, the tax man could claw back a year's worth of tax for e.g. 20 contractors on the same project, with non-compliance and late payment penalties lumped on top (which themselves increase with respect to how long it took HMRC to get around to investigating you). It could be the case (hypothetically) that it would only require one member of a team to report the inability to substitute, or the presence of a line manager, for an entire project team's worth of tax to get a question mark placed next to it.

Net result for contractors: anyone who understands what's going on has either pivoted into becoming a permanent employee, avoiding the whole mess, since contracting is an expensive activity to begin with, and the premium has now been removed, or has banded with a few friends and attempted to set up "micro agencies". I've already encountered these, where substitution was advertised very early in conversation.

Net result for the market: it will be all but gone by April 2020.

The bit that sucks, if you are a legitimate contractor, is that rather than clients determining on a case by case basis whether or not a contract falls under IR35, they're short circuiting the whole thing by assuming every contract falls under IR35.

However I suspect this is because _most_ of their contractors are actually just disguised employees, and I say this as a contractor myself. However the legitimate contractors are also getting hit by the backlash now that the clients are on the hook for penalties.

Personally, I'm going to keep contracting past April as I generally only work with small businesses anyway and they can see quite clearly that my contract does not fall within IR35. If however they had 100 contractors instead of say, 1-2, it's much harder to make that determination.

> Net result for companies: building big overnight temporary teams out of contractors e.g. for 6-12 month projects are vastly less likely to do so, for fear that at some future date, the tax man could claw back a year's worth of tax for e.g. 20 contractors on the same project

Why shouldn't the companies be paying the required taxes for the 6-12 months exactly? It sounds like they are doing temporary employment. In other words, this finding sounds exactly correct.

Are there no fixed-length employment contracts in the UK? For these projects, wouldn't the correct thing to do be having these people employed on a limited term contract as full employees, and have to pay all the correct employment taxes and such? This seems like a logical thing for the government to want, and I don't blame them for enforcing it.

And wouldn't the person who's doing this work benefit from it as well? They get benefits this way, and it's not like being fully employed by different companies for 6-12 month stretches is that different from not technically being employed by those employees but working exclusively for them nonetheless over 6-12 month periods.

It eliminates the sizeable premium that previously attracted skilled labour to the instability of contracting. Without premium, why bother with the risk?

FWIW, prior to the recent change, I believe the situation had been the status quo since well into the 90s. I only started contracting circa 2007

Why would it eliminate the premium? Companies would still be willing to pay extra for shorter term highly skilled workers that produce results.

And if that premium only existed because the company wasn't having to pay the employment taxes and benefits that they should, then it deserves to go away. It was tax avoidance, not an actual premium.

Well, from your feedback, the law seem to have had the required effect combining supression of disguised employment, assigning the right responsibility to parties involved and avoiding dilution of said responsibility.

In other countries, IT/dev contractors are paid at a 50% premium to offset the short term and no benefits.

Most people who do this (like myself) like the way things are - basically FTE, but get paid a lot more in exchange for no sick leave.

You don't have to speculate, there have been several cases where the Prudhommes re-qualified contractors as full-time employees. It usually takes 1) a well-organized union in company Y to help with the legal process, round up candidates, etc. and 2) an actual desire from the contractors to be hired by company Y. (Just mentioning 2 because some contractors I know, who've been posted to the same company for a long time, wouldn't dream of working there as an FTE).

I've been (remotely) involved in such a mass (about a dozen FTE) requalification 10 years ago. Needless to say, the rules for contract duration and conditions were strongly tightened up afterwards.

Oh you mean like fucking Google?

As one of those red badges, this post immediately made me think of my entire team.

Which is weird as in London low paid compared to SV. The Normal rule of thumb is 2.5 to 3x a FTE (full time employee) cost.

eg for me I would want to target £600 to £750 per day (possibly more if I was commuting to London) depending on whether its inside IR35 or not. This figure is low as I deliberately worked locally -

If the agency that pitched me the Grade 6 / 7 role in the civil service came off my day rate a contractor would be 1200 to 1400, a 7 is a full Colonel and 6 is between that and a Brigadier

I suspect the long term aim is to force the UK into the US model of a large part of the professional workforce being lower paid consultants.

It is a win-win situation, the majority of those junior devs are from North Africa and they still make way more than they would have back home.

The losers are the local people who get fewer opportunities as a result. Not saying it's good or bad, just putting it out there.

I'll take the hit and say it's bad. A great purpose of nation states is to enrich and protect the lives of those who are from those respective nations, often and usually at the cost of others. A bunch of non-governmental entities undermining the nation state is undeniably untenable -- both cannot thrive.

People, especially the rich, often pretend we don't live in nation states and that the global nation is here -- but it very much isn't. I think we ought to be afraid of what happens when nation states dissolve. The ultimate result doesn't seem to be unification but disunion.

I don't think we can say it's good or bad without context. Hiring skilled immigrants at a lower price might enable a company to compete for contracts with overseas companies with cheaper labor, thereby making the company, it's shareholders, and by extension the nation, money that it would have otherwise not have gotten.

I think the "populist vs. globalist" dichotomy as is often used in our political discourse today is far too reductive and not descriptive of reality, if not for society at large then definitely for HN.

With the “lose” being the US-based developers being paid less by virtue of working at HP instead of Microsoft.

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