Several leading groups from the UK’s contracting industry have highlighted the role that IR35 rules have played in the UK’s Heavy Goods Vehicle (HGV) driver shortage. IR35 was introduced for private sector businesses this April, meaning that companies using contractors became responsible for determining whether they were truly self-employed or not.
The process for determining IR35 status has been criticised for its complexity and commonly cited as a reason for many companies adopting blanket policies such as no longer engaging contractors, only engaging umbrella company contractors or only engaging “inside IR35” contractors (i.e. contractors that join the company payroll, but don’t get employment rights).
As a result, some contractor groups now say that many HGV drivers now face a situation where they must join the payroll of the business that they contract for. Research by the Road Haulage Association has identified this as a key reason for over half of HGV drivers leaving the industry.
IPSE Director of Policy Andy Chamberlain said: “The changes to IR35 are the forgotten factor driving the HGV crisis. The IR35 changes have already had numerous unintended consequences from freelancers losing work left, right and centre, to many being forced into unregulated – and too often unscrupulous – umbrella companies. Now we can add fuel and food shortages to the list.”
Chamberlain added that, while IR35 was “evidently not the only factor” in the driver shortage, the government “must address the IR35 factor” if it “really wants to resolve the HGV crisis and get food and fuel flowing again”.
IR35’s contribution to the driver shortage was also flagged by Qdos CEO Seb Maley, who said: “Give genuinely self-employed people no option but to work as employees or pay tax as an employee, and the chances are, they’ll stop working with you.”
“There are other factors contributing to the UK’s shortage of HGV drivers – ones perhaps less easily managed – but by rethinking needlessly risk averse IR35 decisions, firms would stand a much better chance of retaining the services of HGV drivers.”
Maley added that other industries should view the current crisis in the haulage industry as a warning to “ensure they have the processes in place to manage IR35 reform compliantly and continue engaging contract workers, who hold the key to labour market flexibility.”
