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Challenges facing the construction industry in 2021…

Our whole society has seen unprecedented changes this year, and the future of the economy is still uncertain. We are seeing optimism returning in some areas, and there appear to be signs of recovery in our sectors. However, we are under no illusion that many challenges lie ahead as we adjust to a changing market where the only strongest and most progressive companies will prosper.

Alongside the many challenges we are all facing inside and outside our businesses, there are two key areas of legislation we all need to prepare for in the next few months: 

IR35:

The well-publicised changes to IR35 legislation will now come into force on 6 April 2021. 

From this date, medium and large companies will be responsible for determining the employment status of any contractor / PSC (worker providing services via their own limited company) – are they “inside” or “outside” IR35? This includes PSCs providing services via a sub-contractor or an Agency. The legislation moves the obligation for this assessment, and the potential tax / NIC liability, from the PSC to the “End Hirer”. 

Workers who are paid via an Umbrella Company do not fall into the legislation as they are employed and pay Tax and NIC, as are PAYE operatives. Operatives who are paid under CIS or are “sole-traders” are also out of scope, although would need to be engaged by a compliant third party who are completing sufficient “SDC” due-diligence and can indemnify their client.

We would recommend reviewing your Contractors / PSCs, and also your wider supply chain, to ensure that you are fully aware of your obligations and any potential liabilities in the event of non-compliance.

Points Based Immigration System:

From 1 January 2021, migrants looking to work in the UK from inside and outside the EU will be treated equally. There is currently no route for low-skilled or temporary workers looking to enter the UK for work, as the system focuses on permanent job requirements and highly skilled migrants.

This will inevitably provide challenges for our industry due to the high number of skilled and unskilled EU workers currently working (and required) on a temporary, short-term, or ad-hoc basis. This challenge has been worsened by the large numbers of EU workers who have left the UK immediately prior to the Covid-19 pandemic and not returned. Further, HMGovernment is promoting Construction as a platform for an economic recovery, which will require additional labor to current levels.

There are a number of wider industry initiatives to address these potential skills and labor shortage, but we can all play in a part in minimising the potential impact:

  • Encouraging all EU nationals currently working in the UK to register for the Settlement Scheme. Applicants can obtain “pre-settled” or “settled” status, which maintains their rights to work. Applications must be completed before June 2021.
  • Training – we need to up-skill and retain our current workforce. We have written on the importance of this previously.
  • Planning – it sounds obvious, but early and detailed engagement with labor suppliers and sub-contractors to “book” resources should mean your projects can be delivered on time.
  • Investigate less labor-intensive methods of working, including off-site fabrication, modular construction, and self-delivery using labor suppliers.

The Shore Group is well placed to offer advice and solutions to these new challenges. We work closely with our legal and training partners, to ensure that our clients and their supply chain are compliant and able to deliver sustainable outcomes.