EMERGING GLOBAL CONTINGENT WORKFORCE TALENT SOURCING TRENDSREDUCING RISK WITH PROPER CLASSIFICATION AND COMPLIANCE

WELCOME

• All lines are muted• Submit any questions through the Q&A

Feature • Questions will be responded to at the

end of the webinar • There will be 2 poll questions• Webinar will be recorded and sent to all

registrants, with a copy of the presentation

SPEAKERS

OVERVIEW

Global Contingent Talent Sourcing and Compliance Overview

Technology - Direct Sourcing and Talent Platforms

Contractor Engagement Risk: Asia, EMEA, Americas

Global Covid19 legislation enacted or planned

CXCComply Introduction

Questions

Global Contingent Talent Sourcing Trends

GLOBAL TRENDS – WORK, WORKER, WORKPLACE

77Mformally identified freelancers in Europe, India and the United States

of the average enterprise’s overall workforce today is comprised of non-employee labor

Today, businesses are overcoming market challenges by harnessing cloud-based technology and integrating digital tools in their existing processes.

2019: 63%Mastering the many channels of talent

acquisition is a high-level priority for businesses as

they move into 2019.

61%of businesses

today are leveraging online

staffing/online talent platforms

29.6M freelancersHave access to the world’s

largest online talent marketplaces – Freelancer

GLOBAL TALENT – SOURCING CHANNELS

Online Market Platform

Traditional Recruitment Internal

or Outsourced

Offshore Sourcing Centres

MSP Vendor Managed Programs

Talent Pool s Public & Private

WORLDWIDE REGULATIONS

DATA SECURITY SELF EMPLOYMENT LABOUR REGULATION

EU General Data Protection Regulation

Laws influenced by GDPR

Contractor Confidential Info

Breach notification rules

Contractor Classification

Independent Contractor / Corp. to Corp

Statement of Work Contractors

Deemed independent contractor laws

1099 IC Compliance USA

IR35 UK

New licensing regimes for labor hires

Limits on zero hours and fixed term contracts

Sham contracting

MODERN WORKFORCE- RISK HEAT MAP

The heat map illustrates generally where businesses are facing risk in relation to the modern workforce and where misclassification claims are an issue.

12%

28%

28%

26%

6%

GIG ECONOMY: Global Risk Rating

Risk Level 5 (HIGH)

Risk Level 4 (MEDIUM TOHIGH)

Risk Level 3 (MEDIUM)

Risk Level 2 (LOW TOMEDIUM)

Risk Level 1 (LOW)

POLL QUESTION #1 (30 seconds)

What Contingent Worker Talent Acquisition strategy is your organization currently utilizing?

A. MSP with a panel of staffing vendors filling roles

B. Internal recruitment team sourcing roles

C. Utilize cloud platforms to identify talent

D. Talent pool of candidates

E. Hybrid of multiple channels above

THE WHAT WHY AND HOW Why It’s Relevant Best Practices Benefits

Direct Sourcing & Talent Platforms / Pools

THE TRIED AND TRUE “INDUSTRIALIZED” STAFFING SUPPLY CHAIN

Strengths Needs to improve• Known, standard• Reliable• Outsource

• Recruiting• Payroll• Compliance (EOR)

• Access to more talent• Candidate engagement• Time to fill/Friction• Quality of hire• Overhead cost/margin

?

DIRECT SOURCING – SIMPLY PUT

• Direct Sourcing is an alternative model for accessing new contingent talent without the use of staffing suppliers.

• Benefits aspired to include: access to new talent populations, more control for hiring manager, improved time-to-fill, enhanced quality-of-hire

• Who-you-know “network”• Cut through the red-tape • Take control, get it done• Unplugged from IT (and visibility)• Limited, if any, compliance management!!

DIRECT SOURCING: THEN AND NOW

THEN NOW• Fit-for-purpose processes/technology

• Sources of talent expanded (e.g., online marketplaces, etc.)

• Talent pool curation/self-sourcing

• Streamlined, digitized processes (including organization-configurable compliance workflows/gates)

• BI and data analytics

• Internal systems integrations (e.g., financial, VMS, HCM)

• External integrations (digital ecosystem)

• Integrated external services, including compliance assurance (classification, regulatory, payments, etc.)

DIRECT SOURCING – EMERGING DIGITAL ECOSYSTEM

VMS

External Compliance/ Payment Provider

Online Marketplace Platforms

Job Boards and Social Networks

Enterprise Organization

1

2

3

Internal Recruiting and Curation Team.

Private Talent Pools

DSW/S

Hiring Manager

Direct Sourcing Solution

2%

7%

7%

8%

10%

18%

18%

30%

0% 5% 10% 15% 20% 25% 30% 35%

Ability to engage a resource for a very brief engagementC59:CC59:C66

Lower cost of the talent itself (what an independent worker earns)

Get tasks/small projects done without the hassle of HR/procurement

Engage and pay talent on a project basis, under an SOW contract

Avoid time and transactional costs of an intermediary

Time-to-value

"Direct source" and get exactly what is needed (quality of hire)

Access to talent

Based on your observations of your clients and prospects, what would you say they value the most about the independent workforce? (Choose up to 3 most important)

IS IT HAPPENING?

Pinnacle enterprises Other enterprises

Well-integratedCurrently Adopting

Currently EvaluatingEvaluate in 6-12 mos.No plans/not adopted

ARE ENTERPRISES ADOPTING?

Adoption level of best practices from “well integrated” to “no plans/not adopted”

Source: Everest Group: Contingent Workforce Management (CWM) Pinnacle Model™ Analysis

Global Contractor ENGAGEMENT RISK & GOVERNMENTAL LEGISLATIONS

POLL QUESTION #2 (30 seconds)

How is your organization managing global contractor classification & payroll today

A. Managed and paid internally with comprehensive knowledge of global laws

B. Managed and paid internally with little knowledge of global laws

C. Utilize outsourced global partner to indemnify and reduce risk

D. Unknown at this time

RISK & IMPLICATIONS - ASIA

In the last three years, the Ministry of Manpower (MOM) received over

308 alleged cases of workers being misclassified as “self-employed.

An estimated 30,000 workers in Singapore are classified as professionals, managers and executives (PME's), but earn below $2,500 a month.

The penalties for non-compliance with the new overtime rules include a fine of up to 300,000 yen and possible criminal sanctions, which can apply not only to the employer but to the person responsible for the business, such as the HR manager.

Employers are reminded to proactively review their existing labour arrangements to ensure their workers are properly and correctly classified.

Employers should also keep abreast of this area of the law to avoid the adverse consequences of misclassification.

SINGAPORE

JAPAN

HONG

KONG

RISK & IMPLICATIONS - AUSTRALIA

Sham Contracting

If you are found guilty, you will be liable for apenalty of up to:

$12,600 for an individual; or$63,000 for a company.

Acessorial Liability

- direct liability for holding companies and franchisors with respect to contraventions by subsidiaries and franchisees respectively- accessorial liability for individuals ‘involved in’ contraventions of employment law- accessorial liability for third party entities

The penalties for corporates employing illegal workers in Australia and other possible penalties:

General statutory penalties – tax compliance breaches

Superannuation (pensions)- Superannuation shortfall amounts - Interest on those amounts (currently 10%)- An administration fee of $20 per employee, per quarter

Payroll Tax (Local tax)- Tax shortfall- Interest- Up to 75% of tax shortfall, but can be reduced to 25% if cooperation or voluntarydisclosures are made at appropriate time.

Breach of Australian employment law

$12,600 for an individual; or$63,000 for a company.

You may also be required to compensate the worker for any employmententitlements they would otherwise have accrued, e.g. annual leave (and thesecosts fall into the cases listed above in the employment law section)

Income Tax (National tax)- Income tax withholding shortfall amounts - Interest on those amounts - Administrative penalties generally start at $2000

RISK & IMPLICATIONS – UK & IRELAND

All employers in the UK including those oftemporary workers, must conduct a rightto work check. You must do this beforeyou employ a person to ensure they arelegally allowed to do the work in questionfor you.

Failure of a UK employer to conduct these checks will result in both Civil and Criminal Sanctions:

• The Level 1 Penalty is £15,000.00• The Level 2 Penalty is £ 20,000.00

Criminal offence under section 21 of the 2006 Act - if you know or have reasonable cause to believe that you are employing an illegal worker (up to 5 years’ imprisonment and/or an unlimited fine).

• Netherlands legislation covers numerous categories of workers. Most of them can be classified as employees. If the relationship of authority is missing, the worker will be qualified as a contractor.

• Employers who misclassify their workers can face serious consequences. It is important to keep in mind that the way in which an agreement is executed takes precedence over the wording of the agreement.

• Dutch legislation covers numerous categories of workers. Most workers can be classified as employees. There are three requirements to qualify an agreement as an employment agreement:

1. there has to be a relationship of authority, where the employer can give instructions to the employee

2. the employee is obliged to personally carry out the agreed employment

3. the employee receives a salary

Where a worker and employer have entered into an arrangement which results in the Irish Tax Authorities making a determination that a relationship of bogus self employment exists.

The Irish Tax Authorities have powers to recover the additional PRSI (social insurances) that have not been paid -failure to comply with this order can result in the worker being unable to access social welfare.

The Irish Government is expected to enact legislation in 2020 outlining an appropriate penalty and sanctions regime.

Right to work Checks UK01 Netherlands -Classification02 Bogus Self Employment

– Ireland03

IR35 RISK DETERMINANTS

Simplified, consistent & streamlined process across all locations

Exceptional contractor experience and minimal churn

Minimize Administration and cost burden of implementing IR35

Verifiable audit trail and changed way of working to reflect new realities of IR35

Risk mitigation and IR 35 compliance for Contractors deemed outside IR35

Workforce visibility, measurement & continuous improvement

RIGHT OF SUBSTITUTION

LEVEL OF CONTROL

FINANCIAL RISK BORNE

PROVISION OF OWN EQUIPMENT

LEVEL OF INTEGRATION

IN BUSINESS ON OWN ACCOUNT

MUTUALITY OF OBLIGATION

IR35 Payroll Program ObjectivesDETERMINANTS

USA RECENT & POSSIBLE STATE ACTIONS

• California State Statue 1/1/2020

• Focus on Freelancers andIndependent Contractors

• ABC Test A - Free from control B - Outside companies usual hiring C - Contractor is regularly engaged

in same trade or occupation

Assessments required to be performed and results recorded for possible audit defence

Misclassification if found can be reviewed with retroactive audits for previously classified contractors

• New Jersey – HR rule today couldbecome law

• New York – Bill S6699A

• Illinois - Mirror AB5

• Massachusetts - MICL IC LAW from2004

All driven by states looking to protectlower wage and emerging techenabled workers. Ripple effect intoprofessional categories.

Company can not have W2 workeremployed or contract performing sameor similar role

AB5 - California01 State Legislation Pending02

1.5%of the employee’s

wages, plus interest

40%of the employee’s FICA

(Social Security and Medicare) contributions

$1000 in criminal penalties per misclassified employee

1 year up to 1 year in prison

Global Covid19Legislation

Covid 19 – Global Government Actions

USA W2 Employee, 1099 IC’s – paid sick leave

Canada• Sick leave if 600 hours worked over last calendar year• Can apply for emergency aid if not qualified

UK• 94.25GBP per week for 28 weeks employer paid • Self-employed and earning less than 118GBP per week – apply emergency support assistance

Japan• Employer can be liable for Workers Compensation if work place not kept safe or requires travel

Australia• Wait time for sick leave waived. Casual employees and IC’s may now qualify

Powered by:

CXCCOMPLY

Compliant global contractor classification

to mitigate risk

Classifications: Independent,

Freelancer, Sole Trader, Limited Company, Corp.

to Corp.

Online platform built on Salesforce.com platform

Country legislation driven vetting and

validation to determine classification

Right to work in country screening

Vetting reporting and storage to assist with audits and inquiries

Full indemnification of results

Background screening based on in-country

laws

Re-vetting contractors at agreed intervals

4

5

Post Vetting Global Contractor Engagement

MANAGING YOUR CONTINGENT WORKFORCE

100+MSP, RPO & Staffing

partners globally EST.1992

2500+ IC & C2C

Contractors

Vetted In 2019

65+

200+ clients

globally

Countries serviced

Globally

12,000 contractors payroll annually

Global revenue

US$600min 2019

Global leadership team average tenue of

14 years

fluent in over 25 languages

200+ staff

Experience and ability to manage

global currency

Contingent programs: Up to

1,000 workers

All programsrenewed & referenceable

CASE STUDY: GLOBAL COMPLIANCE

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Questions

CONTACT INFORMATION

E: JOHN.SMITH@CXCGLOBAL.COM E: CONNOR.HEANEY@CXCGLOBAL.COM

@CXCGLOBAL_USA @CXCGLOBAL @AndrewKarpieC: +1 203 727 0803WWW.CXCGLOBAL.COM

C: +353 857 409 210WWW.CXCGLOBAL.COM WWW.SPENDMATTERS.COM

Andrew KarpieAnalyst, Research DirectorSpend Matters

E: AKARPIE@SPENDMATTERS.COM