Following the evolution of the gig economy, which brought with it confusion regarding employment status of such flexible workers, the government consulted with stakeholders regarding employment status and whether the current legal framework needs to change. The consultation took place back in 2018, and today we have finally had their response published which you can read here.
Key conclusions from our brief analysis include:
1. The current 3 tiers of employment status (self-employed, worker and employee) and 2 of tax status will not change
2. The Good Work Plan in 2018 committed to improving clarity of employment status framework, but this will not be happening any time soon as the consultation response states “the benefits of creating a new framework for employment status are currently outweighed by the risk associated with legislative reform.”
The main reason is that they believe the flexibility of the current labour market has been essential to the success of our post-pandemic labour market.
Whilst I do agree with them on this point, there are very significant concerns about the numbers of people who are being exploited by virtue of not understanding their employment status and accompanying rights, including those who are self-employed but in reality shouldn’t be. Working for yourself should be a choice but it isn’t always in practice, meaning many are vulnerable. The issues are complex and not as simple as educating people – there are cases where people know they are being exploited but they accept it as they need work and income.
3. A new central resource on employment status has been produced which aims to help individuals and businesses to understand how it affects them. This is a good start.
4. Work is being done to clarify ‘working time’ which should help those in the gig economy understand if they should be paid whilst logged into their app on stand by between gigs. Depending on their conclusion this could be really positive for gig workers.
5. HMRC’s CEST tax tool is mentioned although it doesn’t look like much will be changing here, despite widespread criticism.
6. There are no plans to closer align employment status and tax status.
In summary, the government will not be taking significant action to bring about any big changes, instead they are focussing on improving clarity on employment status and working time. This is understandable because so much seems to have changed in the last four years, and of course we need to safeguard the economy as much as possible. Therefore, we are not sure this response was actually worth the wait!
