Search Magnifying Glass

Good Work Plan for gig economy workers

Good Work Plan announces greater protection for gig economy workers

In the lead up to the Christmas break, the eyes of contractors and the companies engaging independent workers were focused on the Government’s Good Work Plan, and what resulted in the largest upgrade in a generation to workplace rights.

The Good Work Plan announced a number of changes to employment law as the Government looks to make work for everyone in the UK ‘fair and decent’. As expected, it takes into account the growing importance of contractors, gig economy workers and the flexible workforce in today’s economy.

The Government has taken on board all but two of the 53 suggestions made by Matthew Taylor in the Taylor Review last year, and states that the Prime Minister ‘will not only maintain workers’ rights as the UK leaves the EU, but enhance them.’

There is a clear focus on the need to offer greater protection to gig economy workers and the individuals which the Taylor review considers to be ‘dependent contractors’ – a phrase Matthew Taylor believes should replace ‘worker’ status to make the fuzzy boundaries between self-employment and employment clearer.

While the Government said it will not look to swap ‘worker’ status with Mr Taylor’s ‘dependent contractor’ recommendation, it has outlined plans to ‘improve clarity on employment status, reflecting modern working practices.’ This will be welcome news to genuinely self-employed contractors, many of whom continue to suffer as a result of ambiguous employment status rules.

Contractors will be acutely aware that as a result of the dramatic rise of the gig economy, there has been ongoing confusion around the employment status of these workers and the rights they are entitled to (if any). That the Government is serious about making sure these individuals receive the protection they need has been welcomed.

Employment experts have, however, stressed the importance of keeping a balanced labour market. They say not all workers need or want employment rights. When operating outside IR35, contractors, for example, prefer working without them. They don’t necessarily view themselves as vulnerable or in need of protection.

Although, it’s a different story for contractors working inside IR35, and The Good Work Plan does acknowledge this. It will explore the possibility of aligning tax status and employment rights – something the many thousands of contractors threatened by IR35 reform have called for.

Last year, Qdos research revealed that 89% of contractors working inside IR35 believe it’s only fair that they are offered employment rights in return for being classed ‘employed for tax purposes’ and made to pay a similar amount of tax to permanent staff.

That said, aligning employment rights and tax status frameworks isn’t that simple in reality, as CIOT Tax Policy Director, John Cullinane, explained;.

“It is difficult to see much progress being made on aligning and simplifying employment and tax frameworks within the constraints the Government have imposed on themselves. We have three different categories of workers (employed, worker or ‘dependent contractor’ and self-employed) for employment law but just two for tax (employed and self-employed).”

Regardless, contractors will be pleased to hear the Government has also taken on board the Taylor review’s concerns about the quality of existing employment status tests, which an overwhelming majority of IR35 experts do not believe are up to scratch.

Assurances to improve CEST, for example, are regularly made by HMRC and so contractors won’t necessarily expect the Government to deliver on its latest promise; there is a lot of scepticism around this subject.

The Good Work Plan also announced that a loophole, known as the Swedish derogation, which allows agency workers to be engaged at rates cheaper than permanent workers in similar positions, will be closed. Furthermore, in another move to protect individuals from unfair working arrangements, the Government will raise the maximum employment tribunal fine for companies, from £5,000 to £20,000.

Generally speaking, the response to many of the reforms unveiled as part of the Good Work Plan have been well received. It’s clear the Government finally recognises the growing value of the flexible workforce and is willing to introduce new measures to protect parts of it.

However, contractors will not want this extension of workers’ rights to come at a high price. By and large, contractors benefit from the flexibility and independence gained through working without them.

As a parting thought, there are still some questions to be answered. While a number of these reforms have been introduced immediately, the Government must still ‘legislate’, ‘bring forward proposals’, ‘consult’ and ‘tackle’ the issues that arguably matter most to contractors, who will be watching closely.

By Contractor Weekly


Add a comment

Have any comments? Why not kick off the discussions!

Leave a Reply

Your email address will not be published. Required fields are marked *