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IR35: Lack of employment rights for deemed employees

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The off-payroll working reforms have been postponed to April 2021, which gives the government a year to consider any unintended side effects, such as the lack of employment rights afforded to contractors deemed to be employees.

3rd Apr 2020
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An employee is entitled to various employment rights, including (but not limited to):

  • Minimum notice periods
  • Protection against unfair dismissal
  • Statutory Sick Pay
  • Statutory maternity, paternity, adoption, and shared parental leave and pay
  • Statutory Redundancy Pay

However, if a contractor is treated as a deemed employee by their client (ie their engagement is considered to be within IR35) then that contractor is not afforded the same employment rights.

This is made clear in the government’s guidance to fee payers (typically an agency or the end client).

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Replies (2)

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By tonyaustin
06th Apr 2020 10:49

One reason contractors are paid more than equivalent employees of their clients is that their contracts are flexible with no right to notice or redundancy and the client is not liable for pay when on leave. The client is also not liable to pay them when on leave or when sick. If deemed employees under IR35 are given those rights, the clients will just reduce what they are prepared to pay them to cover the cost of providing additional rights.

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By psimonparsons
09th May 2020 10:24

There are many misunderstandings.

Some think that as they have been described as a deemed employee that makes them an employee. It doesn’t as ‘deemed employees’ are not ‘employees’. An employee is an employee, a none employee could be a ‘deemed employee’. May apply to IR35.

The other misconception is that Tax and NICs liabilities infer employment rights, they don’t. They are not related.

Employment right are not governed by tax law or even HMRC, There are millions of employees with rights that pay no tax and NICs, why? Because they don’t earn enough. Employment rights are governed by BEIS.

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