The UK is among those countries hit hardest by the global talent shortage. The problem has been exacerbated by Brexit, which brought an end to the freedom of movement of people between Britain and the European Union.

Traditionally, the UK has relied heavily on migrant workers from across Europe to carry out jobs such as nursing and fruit picking. But since Brexit came into force on January 1, 2021, employers have had to look elsewhere for solutions.

While some have turned to UK-based contract workers, others have gone further afield to other continents such as Asia and Australasia to find the right talent. But both of these options come with their own set of unique challenges.

The UK government’s introduction of IR35 (Inland Revenue 35/ Off Payroll Rules) has required businesses to comply with a new set of rules when it comes to taking on UK contractors. Essentially, IR35 is designed to prevent contractors from reducing their taxes through using a limited company while maintaining a permanent position with an end-hirer.

If the worker is inside IR35, they will have to pay the same rate of tax as an employee at that company and if they are outside of it they will have to pay tax and national insurance contributions based on their earnings as a self-employed individual. This can be confusing and complex for employers to determine, so many have instead engaged HR and payroll specialists or have sought legal advice to help them remain compliant with the legislation.

The benefits of using an umbrella company
Another solution is to use an umbrella company to manage the contractor’s affairs, from onboarding, HR and payroll to making sure they are paying the right amount of tax. They also handle other potentially tricky administrative aspects such as holiday and sick pay, and the worker’s rights, leaving the organisation’s HR department to get on with focusing on critical and value-added tasks, safe in the knowledge that they are still meeting IR35.

The challenges of hiring talent from abroad
If the company can’t obtain the right candidate from the UK then they will have to look overseas to recruit. That brings with itself a host of different problems that have to be overcome too.

A good starting point is to engage a global recruitment agency that specialises in the industry or area that the firm operates in. They can provide advice on the best places to search for specific roles and expected pay rates, as well as vetting candidates to make sure that they are suitable.

Then there are a host of employment factors that have to be considered. These include any country-specific employment laws and regulations that have to be met, determining what their tax status would be, based on whether they are a UK resident or working remotely outside of the UK, and whether they fall within IR35. In this case, the government’s Check Employment Status for Tax tool can be used.

Once the employer has the right contractor in place, they then have a range of administrative duties to fulfil, such as processing invoices and ensuring the worker is paid one time. When all of these tasks are added up, it puts a huge additional burden on companies.

That’s where umbrella companies come in again. Using an umbrella company enables businesses to overcome this myriad of administrative hurdles, while also avoiding any legal pitfalls.

Kris Simpson, Country Manager UK at Cool Company, the fastest-growing umbrella company working to simplify and streamline administration for recruitment agencies and contractors.Providing freedom for contractors without the bureaucracy. While allowing businesses to benefit from access to niche talent without the need to take on new hires, or handle the admin associated with contract recruitment.