Transport for London (TfL) is set for a backlash against its plans to stop using temporary workers who operate through limited companies.
Critics have said the plan will deprive TfL of talent in key areas, with the potential to throw crucial engineering projects off track.
TfL has contacted over 2,000 agency staff asking them to sign up to several options, including becoming an employee or stop working for TfL, as part of its attempts to adapt to IR35 reforms that will come into force in April.
Changes to IR35 announced in the Autumn Statement mean public sector organisations will determine the IR35 status of an engagement, rather than the contractor’s company. The alterations are being introduced in an attempt to “tackle the high levels of non-compliance” with the current rules.
But City A.M. understands there’s discontent among agency workers over the changes, and many are weighing up leaving altogether. Of the 2,430 agency workers listed by TfL for the second quarter of 2016, 1,865 were paid through personal service companies; nearly 77 per cent.
As of November 2016, TfL had 2,295 agency staff.
While TfL has set a February deadline for workers to decide their fate, two months ahead of the IR35 changes, some have voiced concern over whether the organisation will be able to find the necessary skills for costly project work.
Andy Chamberlain, from the Association of Independent Professionals and the Self Employed, warned a temporary worker exodus “could end up costing TfL more money” as delivery of projects will be delayed as it will need to replace the lost skills.
As “the tax rules are so complex”, Chamberlain said other public sector bodies might take similar action.
Tricia Wright, human resources director at TfL, said: “We are undertaking a root and branch review of how we are organised and operate. As part of this, we are significantly cutting the number of people appointed through agencies and reducing agency fee levels.
“Where it makes sense for us to employ people on a permanent basis, we are doing so and we are confident that we can deliver our multi-billion pound investment programme that will significantly improve transport for all Londoners. We are also working to ensure that we comply with the new intermediaries legislation which comes into effect from April this year.”