TAXING MATTERS IS THE GOVERNMENT’S NEW GUIDANCE ON STATUS ENOUGH?
The Government has announced new employment status guidance. This will clarify employment rights and status for businesses, individuals and other groups (like those working in the gig economy). This includes things like pay, leave and working conditions.
“Today we are tidying up the rules, helping workers to find out if they are being treated fairly by their workplace,” said Business Minister, Jane Hunt.
The new guidance according to the Government
The government guidance will be a ‘one-stop-shop’ for individuals and businesses to understand which employment rights apply to them. Gig economy workers set to benefit the most, as the guidance enables them to ‘check their workplace is treating them fairly.’
The new guidance brings employment status case law into one place for businesses and individuals to access.
The government will ‘support’ workers by upgrading their understanding of their rights at work, enabling them to have informed discussions with their employer and take steps to claim or enforce them where necessary. The government says that the guidance clarifies the rights that gig economy workers are entitled to. This includes the national minimum wage to paid leave, while offering them a degree of flexibility to take on additional work to ‘top up their income if they choose’.
This follows the landmark Uber Supreme Court judgment, which classified individuals in the gig economy as ‘workers’, meaning they are entitled to employment protections. The new guidance includes advice for businesses of every size. This guidance is especially helpful for microbusinesses, start-ups and SMEs that have less access to legal expertise.
The government also hopes that by reducing the risk of companies being fined, businesses will have the confidence to support their staff which will stimulate economic growth. Equally, the guidance will help to curb unscrupulous employers from attempting to exploit the system in order to increase profits.
Commentary from the experts
Shazia Imtiaz, General Counsel at the Association of Professional Staffing Companies (APSCo) said: “More was needed from the guidance in order to build on the 2018 Good Work Plan”. She added: “Any clarity around
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employment status, rights and tax is certainly welcome. However, the response to the consultation is missing the legislative changes that we had hoped for.”
Is the guidance going to increase or decrease the confusion around employment rights for employers and workers? Susan Ball, president of the Chartered Institute of Taxation, believes that while the guidance offered some guidance for employers and individuals, it did not eliminate the potential for confusion. She said: “It’s disappointing that after many years of discussion the government has decided now is not the right time to bring forward proposals for alignment between the employment and tax frameworks.”
Other commentators echo the fact that clarification is needed. “The current approach relies on largely subjective tests based on an extensive body of case law,” said Lee McIntyre-Hamilton, partner at Keystone Law. He specified that clarification was needed around employment status tax assessments, particularly because the term ‘worker’ still exists as an employment status but doesn’t exist for tax purposes.
Seb Maley, CEO of IR35 specialist Qdos, said more work was needed around IR35 and around employee rights, especially as many contractors will continue to be taxed as employees but without the protection of employment rights.
Maley, like his contemporaries, is annoyed that the government isn’t making things clearer: “This response is astonishing, even for this government. If now isn’t the right time to align tax and employment status, when is?” he said.
Gary Jacobs, CEO of Taxi & Private Hire Accountancy Eazitax, said: “Any guidance in this highly controversial sector is welcomed, however it was created in an attempt to demystify the law for company owners and gig economy workers alike. From my perspective, it was totally aimed at employment status and not on the tax implications, so the jury is still out on the future of tax implications recently talked about in the trade.
In effect, after four years of detailed discussions, the government has decided not to legislate formally in this area. They chose instead, to once again issue guidance, meaning ‘suggestion to courts not direction to courts’, so advisors, such as myself, are left to our wits and educated guesswork in many areas to navigate our way through the mire.”
SEPTEMBER 2022 PHTM
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