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Warning as new rules for freelancers come into force

A Midlands employment lawyer has warned businesses across the region that sweeping changes to rules on using contractors or freelancers have now come into force. The warning is from Sally Morris,

Paddy Eaton: Key deals

Firm oversees games service sale

Law firm DWF, which has an office in Birmingham, has advised an Irish-based video games services company Keywords Studios plc on two acquisitions. Keywords has bought games

developer Climax Studios for £43m and acquired an 85 per cent interest in similar firm Tantalus Media. Climax is a UK company and Tantalus is based in Australia. These acquisitions join a list of dozens of companies bought by Keywords since 2014. The firm was founded by ex-

Microsoft employee Giorgio Guastalla in 1998, in Leopardstown, and first became involved in the video game industry in 2004. It was after the firm floated on

the Alternative Investment Market in 2014 that it embarked on a strategy of expansion by acquisition. The latest transaction follows

others in the past six months, including Jinglebell Communications SRL (Italy), a provider of audio recording, music production and sound design services to the video games and advertising industries, and Indigo Pearl Ltd (UK), a full-service PR agency specialising in the video games sector, on which DWF also advised. DWF’s corporate teams in the

UK, Australia and Italy acted for Keywords on the two latest deals, led by London corporate partner Paddy Eaton. He said: “We are hugely proud of

our work with Keywords Studios, using our global platform to support such a dynamic business with its international growth. “We look forward to seeing

these businesses flourish as part of the Keywords family.” Andrew Kennedy, head of legal

at Keywords, said: “We were very pleased with the support provided by Paddy and the rest of the DWF team on these transactions and we look forward to working with them again as we continue to deliver on our growth strategy.”

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partner and head of employment at Worcestershire law firm Mfg Solicitors, after the so-called IR35 changes came into effect last month. The new rules see employers of

medium and large businesses having responsibility for determining whether a contractor is ‘inside’ or ‘outside’ the business, either in the public or private sector.

‘In many ways the rules are an unfair burden on businesses’

These rules have been

introduced by HMRC to crackdown on what it sees as people avoiding national insurance and income tax by supplying their services through personal service companies. The issue has been rumbling on

for years, and is widely seen to be aimed at well-heeled celebrities, such as footballers, TV presenters and actors. Eamonn Holmes, Lorraine Kelly

and Gary Lineker are among those caught up in the row. According to the ‘Financial

Times’, a tax tribunal last month heard that ‘Match of the Day’ presenter Lineker allegedly owed

the taxman £4.9m after passing himself off as a freelancer, even though he was ‘effectively employed’ by the BBC. The case is ongoing, and it

should be pointed out that the taxman has already lost a number of these tribunals, with one organisation, ContractorCalculator, reportedly calling the Lineker situation ‘grossly unfair’. Ms Morris said: “I am concerned

that many businesses here in the Midlands are unaware of the seriousness and complexity of the new rules which came into force on 6 April. But they are here now and here to stay. “In many ways the rules are an

unfair burden on businesses who rely on using specialist contractors as from now a number of liabilities pass over to them. This includes them having to determine the

status of the contractor for tax purposes and being responsible for issues such as National Insurance contributions and employment taxes if the contractor is a deemed employee. “It’s an issue many don’t need

but must understand if they are to stay on the right side of the new rules in relation to engagements with existing and new contractors. Those who don’t risk impact on their finances and their reputation.” Ms Morris added that small

businesses in the private sector are currently not subject to the same obligations but still have to comply with certain guidelines and conditions set out by HMRC in relation to IR35. The new rules could rake in as

much as £1.3bn in 2023/24, according to Mfg.

Switching off might impact flexibility

A Birmingham employment law specialist has warned that giving employees the ‘right to disconnect’ could have a negative impact on flexible working policies. Eileen Schofield, of Schofield and Associates and

vice-president of the Greater Birmingham Transatlantic Chamber of Commerce, believes that implementing the right to disconnect would mean some of the flexible working benefits could be lost. The right to disconnect has been enshrined in law in Ireland, and means that employees have the right to switch off from work outside of their normal hours, which includes responding to emails and other digital communications. Ms Schofield (pictured) said that calls for a similar

clause to be inserted in a forthcoming bill in the UK – the Employment Bill – have gained momentum, but this could potentially have a detrimental impact on future flexible working polices. She said: “The principle of the right to disconnect is good and I believe that the UK should follow in

Ireland’s footsteps - however, the timing needs to be right to work effectively. The pandemic has allowed companies and employees to realise the benefits of truly flexible working hours, which supports colleagues working around their home responsibilities. “While some staff have benefited from this flexibility, clearly others have struggled to truly switch off after work. “The right to disconnect is the right of

an employee to not routinely perform work outside normal working hours – however, over the last 12 months not

everyone has worked ‘normal hours’. “The challenge with applying a right to disconnect just now is that employees are becoming accustomed to choosing different

working hours every day, but the right to disconnect is likely to mean that this total flexibility will not be completely viable. “In my view, any such change as part of the

Employment Bill should be deferred until at least late 2022 to allow employers and employees to determine the ‘new normal’ for their business.”

Sally Morris: New rules are an ‘unfair burden’

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