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Corbyn critical of short-term contract engagers

Corbyn’s comments reflect the need for greater understanding around contracting and clarity on IR35.

Speaking at the recent Trade Union Congress, Labour leader Jeremy Corbyn criticised the thousands of UK companies which engage workers on short-term contracts, arguing that temporary work is a “source of continuous worry and insecurity for millions of people”. He also stated that the ‘gig economy’ denies “both employees and customers basic protections”.

Hitting out at the businesses which enable 2million freelancers and contractors to contribute over £119bn to the UK each year is a somewhat surprising move. Given that at least 50% of those working independently would ‘never go employed’ according to Qdos Contractor research, Mr Corbyn might have been wise to make his comments less general, and a little more specific to an individual group of the independent workforce, and not to the entirety.

While 47% of freelancers and contractors recently surveyed by Qdos Contractor did indeed reveal that lack of security is their number one business concern, there’s nothing to suggest that highly-skilled, qualified independent workers are rallying for greater protection, or even looking for similar rights to employees.

There are fundamental differences between ‘gig economy’ workers who take on ad-hoc work here and there, and professional contractors whose day-rates can average £500 or more. By not recognising or outlining the various differences between these sets of workers, Mr Corbyn has risked grouping them together as one, despite their motivations and concerns being quite different.

Lower paid ‘gig economy’ workers might well need greater protection, and consider themselves more vulnerable compared to professional contractors. The recent Taylor Review picked up on this, and outlined the need for Government to consider employment rights for ‘dependent contractors’ – Uber drivers and Deliveroo riders to name a few.

But previous research from Contractor Calculator signalled that 80% of freelancers and contractors are actually happier working without employee rights, suggesting that they simply do not consider themselves vulnerable. Not all independent workers need nor want protection. Jeremy Corbyn’s recent comments do, to a certain extent, reflect a lack of understanding on his part.

For highly skilled, qualified contractors, the issue isn’t lack of protection or rights, it’s lack of support. The Government’s increased efforts to enforce IR35 reform and tackle tax avoidance with changes to the off-payroll working rules are somewhat reducing the benefits of working independently – particularly if public sector contractors, and potentially soon to be private sector contractors are not given a fair, unbiased IR35 assessment.

In the past, contractors working through their own PSCs have been able to enjoy certain, but tax limited advantages. Paying themselves more tax efficiently would in many respects balance out the risk of working independently, compensate for the lack of security, and go some way to making up for the fact that they do not receive employee benefits such as holiday, illness, maternity and paternity pay.

In many cases, professional contractors see lack of security as an everyday part of working self-employed. There will always be an element of risk, and a lack of security when going in search of greater independence, flexibility and freedom. But that isn’t to say this group of workers want employment rights.

Recent IR35 reform, which makes up one of a number tax changes affecting the self-employed is hampering UK contractors. Instead of rewarding those entrepreneurial enough to strike out alone and drive economic growth, the Government is seemingly punishing them. That 95% of contractors surveyed by Qdos Contractor believe the Government is reducing the benefit of working independently speaks volumes.

Just last week, Conservative MP for South Thanet, Craig Mackinlay, brought up the issue of IR35 in a parliamentary debate. Although welcoming recent IR35 changes, he urged for greater clarity when it comes to deciding employment status – a point which we can all surely agree needs addressing.

“The rather complex process of recognising whether a person is properly self-employed or properly employed is quite confusing for a small employer. That is still somewhat vague, and there is some gold-plating in the public sector because of the worry about people’s status.

“I regularly see people who work through a proper personal service company and who are clearly self-employed, and not in an employment situation. Out of fear, the public sector is tending to move everybody who works in such a way inside IR35, which adds cost to the sector. It is very difficult to balance,” he explained.

And it is a difficult situation. Lack of security is a near unavoidable by-product of self-employment, but IR35 and the tax system can be designed to balance the risk of independent working. Before that happens though, there needs to be greater clarity over IR35 and employment status, and UK politicians must begin to truly understand the diversity of the UK’s self-employed workforce.

This is not a problem unique to Jeremy Corbyn and the Labour Party though. Right across the political spectrum there is a misunderstanding of what drives and motivates the freelance economy. It is not the first time that a politician has failed to understand the quite specific and different needs of each sector of the self-employed workforce. Nor will it be the last.

But Mr Corbyn’s comments have once again brought into sharp focus the need for senior politicians – regardless of their Party – to properly engage with each component of this diverse sector, and rethink their position on IR35, the ambiguity and confusion surrounding employment status, and the tax system as a whole.

By Contractor Weekly

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13 thoughts on “Corbyn critical of short-term contract engagers”

  1. Lee

    I’m afraid this is just another out-of-touch politician, lacking experience in the modern world.

    I CHOSE contracting; it didn’t choose me. His line of thinking completely discounts the reality that many jobs/projects these days are short-term by nature. Longer-term contracts and protections are not applicable in the cases where a project may last anywhere from several hours, to several months, which presents an opportunity for professionals like myself to plug a short-term gap.

    And you know what? We prefer it! Freedom to choose projects we like. Freedom to work from home. Freedom to choose our clients, and our own scheduled.

    This, in essence, is what the ‘gig’ economy is all about. Matching short-term need with talent. The very last thing on my mind is being tied to a single company with a longer-term contract! I forego that security on purpose.

    Politicians in charge of policy should recognise the changing, faster world in which we all live now. It’s not the 1940s; “one employer for life” isn’t a reality anymore. Many of the biggest companies have toppled, and the start-ups that didn’t exist a decade ago have the highest valuations in the world. Clearly, longer-term contracts that assume an unchanging future are simply not realistic. The world iterates at a pace never seen before in history, and the workforce needs to adapt to that reality — as do its politicians.

    • Soprano

      He’s another twit blaming symptoms rather than actual problems. The reason Britain has a resilient economy in the first place is because it is flexible. No doubt he’d prefer more future labour voters on the dole.

  2. David

    Typical clueless politician – that he happens to be the leader of one our main parties is extremely worrying.

    I have yet to see any evidence that any of our political parties “get” contracting.

  3. Ying Tong

    If Corbyn is smart he can attract a rich seam of votes from the self employed, gig workers and contractors with friendlier tax policies for freelancers.

    The first smart part is in realising that the work place has changed and elective taxation through incorporation is here to stay. The Conservatives’ Canute attempts to get the genie back in the bottle with layer upon layer of legislation just create more exploitable complexity and are harming public sector services.

    The second smart part is in realising that in economic terms it’s hardly worth the candle anyway.

    The third smart part is in handling the political flak the Tories will hurl at him for seeking to ruin our green and pleasant land, sink Britannia, destroy Brexit etc. He’s already shown he has the sophistication to deal with that.

  4. The Q

    It would be interesting to see comrade Corbyns’ parliamentary debating/voting record on all matters IR35 etc since 1999.

    I suspect he sees a new brood mare voter seam from all the “oh, Jeremy Corbyn” kids who might currently be the largest demographic in the “gig” economy.

  5. Marek

    What else we could expect from a communist.

    • Mark

      Exactly, he wants us all employed by “the state” and to be members of those outdated organisations, trade unions. The basic tenet of McDonnell and Milne (I see Corbyn as mostly the mouthpiece of his Marxist friends) is that the people should be reliant totally on the state so that we can be controlled. Even the Chinese have realised that communism doesn’t work.

      • The Q

        > Exactly, he wants us all employed by “the state” and to be
        > members of those outdated organisations, trade unions.

        Well, according to some in the accounting profession, he will find plenty of kindred spirits in the IR (who allegedly have the mindset that virtually everyone in work should be an employee for tax purposes) .

  6. New Profit of Doom

    In my experience, Hiring managers who employ contractors have never heard of IR35 and do not understand any of the rules or the differences between desperately wanting to be an employee and definitely NOT wanting to be an employee.
    Simple things cause me to get twitchy.
    Calling it an interview.
    Having a Holiday Chart
    Having Set hours of work
    Having to use their computers
    Being expected to attend team meeting
    Being Asked for measurements for Work Wear
    Being given a bottle of wine at Christmas like all employees.
    Being given business cards (By a client whose job title includes the words ‘Associates Manager’ and whose job is to employ contractors who are called associates, to fill the skills gaps on Projects they deliver to their clients, and who gets stroppy if his clients find out you are not actually an employee and are a contractor)
    Being expected to use a Pool Car if you go anywhere for the client.

    It would seem the solution should be that hiring managers should be forced to take an IR35 test before being allowed to advertise a role, and that role should be given an IR35 reference number, based on the results, which would indemnify the contractor with the HMRC, and make the client liable if the actual role turns out to be not as the hiring manager has documented.

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