With Philip Hammond’s Autumn Budget speech finally delivered and IR35 reform in the private sector somewhat delayed, contractors can breathe a sigh of relief and fully enjoy the festive season.
Whilst they can afford to be just a little complacent over the Christmas season, the New Year always brings about changes, and 2017 has been a year where employment status has been very much in the spotlight. The landscape of employment status in general looks set to change significantly over the next few years.
There has been a rise in the flexible workforce working in what has been referred to as the ‘gig’ or ‘sharing’ economy, where organisations will commonly offer temporary positions to its workers for short-term or on-demand engagements. Large businesses such as Uber and Deliveroo have been reported in the press earlier this year as having employment claims made against them – the workers engaged believing they should be entitled to employment rights such as holiday and sick pay.
In July this year, the Taylor Review of modern working practices was published, seeking to address the unfairness and exploitation of self-employed workers, particularly in the gig economy. The report highlighted the need to make the rules for determining employment status much clearer, and was referred to in the Autumn Budget notes, stating that;
The government will publish a discussion paper as part of the response to Matthew Taylor’s review of employment practices in the modern economy, exploring the case and options for longer-term reform to make the employment status tests for both employment rights and tax clearer. The government recognises that this is an important and complex issue, and so will work with stakeholders to ensure that any potential changes are considered carefully…
The main event of course this year was the reform of IR35 within the public sector in April, along with the introduction of HMRC’s ESS (subsequently renamed CEST) tool. Reform of IR35 within the public sector has been one of the most controversial changes to take place since the introduction of IR35 itself. Although the government has not announced reform in the private sector yet, it seems clear that it will happen eventually, with the Budget notes stating that a consultation document will be published in 2018.
Reform of IR35 in the public sector has been touted by HMRC as a success with compliance increasing, however on the other side of the coin, agencies and public sector bodies have found it increasingly difficult to engage the specialist and flexible labour they desperately need. The Infrastructure and Projects Authority issued its annual report in July, indicating that many Government projects are in crisis; one of the biggest issues being a lack of resources which is hardly surprising, and which the Government for the time being are seemingly choosing to ignore.
It’s certainly been a controversial year for employment status, with undoubtedly significant change to come. The Government has its work cut out for them in unravelling the complexities of employment status. But for now, you can and should relax and enjoy the festivities – it is Christmas after all!