The rapidly changing face of modern business has highlighted the gaps in employment protection faced by many of those engaged in it. The recent cases involving operations such as Uber and Pimlico Plumbers provide evidence that the current system simply isn’t working.
The legal principles used to determine employment and self-employment status have not changed a great deal from the time when the employment relationship was defined as that of “master and servant”. So it is not surprising that they are no longer fit for purpose and are being uncomfortably contorted by these new cases.
A further driver for change is one of taxation. With lower NIC payments from the self-employed a widening of the scope of “employee” would bring fiscal benefits for the next Government. What do the government plan to do about it?
The Government is taking steps to address the issue, but change is unlikely to be simple or quick. In October last year, the Government commissioned an independent review of Employment Practices in the Modern Economy, which has been chaired by Matthew Taylor. The review was published in early July 2017 and made a number of recommendations, which we summarize below.
What recommendations have been made?
The key areas covered in the review:
- Dependent Contractors
- Premium NMW rates
- Holiday pay
- Tribunal fees
- Unpaid tax
What is the likely response?
Whilst sensible in many ways, it will not be welcomed by all. Many businesses will see it as an interference with their right to operate as they choose, as well as a financial burden that many will be unable to meet without a change to their current pricing methods. Additionally, it would be wrong to assume that all workers engaged in the “gig” economy are unhappy - some find the freedom to work as self-employed enables them to market their skills to their advantage.
What should businesses be doing in the wake of the review?
Teresa May has made it clear that the Government has no intention of “turning the clock back”. Of course, in Canada the term “dependent contractor” has been around since 1936 and as an intermediate category of worker between the employed and self-employed allows those with this status longer periods of notice akin to employees, so perhaps we will learn or take soundings from their model. The Government is due to produce a White Paper in the Autumn. Until this is published, there are no specific actions that businesses can be taking but below are our current insights and reaction to the latest position.