The government last week published its response to the Taylor Review, entitled ‘Good Work’. The overarching ambition of the final report from the Taylor Review was that all work in the UK economy should be fair and decent with realistic scope for development and fulfilment.
The Good Work report included 53 recommendations, and the government has accepted all but one of them. It rejected report author Matthew Taylor’s proposals to reduce the difference between the National Insurance contributions of employees and the self-employed following Budget 2016 and subsequently have no plans to revisit the issue.
Delivering on the Prime Minister’s pledge to not just protect but build on workers’ rights, the government set out proposals to ensure workers know their rights and receive the benefits and protections they are entitled to, and that action is taken against employers who breach workers’ rights. For the first time, will be accountable for good quality work as well as the quantity of jobs.
In some cases, the government plans to go further than the review’s proposals, including:
- enforcing vulnerable workers’ holiday and sick pay for the first time;
- a list of day-one rights, including holiday and sick pay entitlements and a new right to a payslip for all workers, including casual and zero-hour workers;
- a right for all workers, not just zero-hour and agency, to request a more stable contract, providing more financial security for those on flexible contracts;
- making reforms that will ensure that employment law and practices keep pace with modern ways of working created by rapid technological change.
The response from the government launches several consultations which are:
- Employment status – deadline 11.45pm, 1 June 2018
- Enforcement of employment rights recommendations – deadline 11.45pm 16 May 2018
- Increasing transparency in the labour market – deadline 11.45pm, 23 May 2018
- Agency workers recommendations - deadline 11.45pm, 9 May 2018
There needs to be full consideration of the legislative options for employment status in order to ensure that any reforms achieve their aims and do not have unintended consequences, such as damaging genuine flexibility or creating opportunities for less scrupulous employers to game the system and gain an unfair competitive advantage. The purpose of the consultation is to improve clarity for those on the boundary between employment, self-employment and the worker.
In the consultation on employment status for tax purposes, the consultation considers the tests that define the boundary between those currently taxed as employees and those who are taxed on a self-employed basis. While the government acknowledges that some have suggested there should be no boundary at all for tax, that proposition is not considered in this document. This document does also not consider changes to tax or NICs rates or reliefs.
So, the government are looking at everything ‘employment status’ apart from the actual tax treatment. They are not planning on adjusting the primary contributions for national insurance for the self-employed, but are they planning on an equivalent tax for the employer or person who engages the self-employed person?
What we do know is that there is due to be a consultation on off-payroll working in the private sector, which affects those who provide their services through a limited company, otherwise known as a personal service company. Although, I hasten to add, there is no actual definition of personal service company. If brought in, this measure is likely to include the secondary contribution for national insurance by the employer.
What we know for certain is that the government has to do something to plug the £4.5bn deficit which will be created by the so-called gig economy by 2020.
So, is the plan a good response? It promises a lot and there will be a lot of work for those who choose to respond to the consultations but, there is nothing concrete as it all depends on the outcomes from the consultations.
About Rebecca Seeley Harris
Rebecca is a specialist in ‘employment status’ and the law involving independent contractors and the self-employed for the purposes of tax and employment law. Rebecca has run her own consultancy for the past 18 years but, recently was seconded to the Office of Tax Simplification (an independent body of HM Treasury) as a Senior Policy Adviser to advise the government on employment and tax status.
Rebecca was part of a small team of experts who drafted the Employment Status Review 2015, she then continued to advise on the review of Small Company Taxation leading on the taxation of nano companies and the self-employed. As a result of that review, Rebecca developed the concept of SEPA, providing a vehicle to the self-employed to be able to protect the family home. Rebecca was also a representative on the Cross Government Working Group on Employment Status and has most recently published the review into the taxation of the Gig Economy.