What’s the state of Employment Status?

16 Apr 2021

In 2017 the publication of the Taylor Review of Modern Work Practices set out a range of proposals to deal with increasing uncertainty on employment status due to changes in employment engagement models. The 2018 Government response to the consultation considered the following Taylor Review proposal:
“Government should replace their minimalistic approach to legislation with a clearer outline of the tests for employment status, setting out the key principles in primary legislation, and using secondary legislation and guidance to provide more detail.”
The recommendations of the report to have a legislative framework to determine employment status have not been taken forward and the courts continue to make determinations on challenges to status, most recently seen in the Uber case.
Following the Supreme Court ruling in the Uber case that their drivers are workers and entitled to worker benefits, Uber were left with little choice but to meet their legal obligations and announce they will pay the National Living Wage, pension contributions and holiday pay.
Organisations who operate on the basis that the individuals they engage are not workers or employees, have been closely following a string of employment status cases to decide what their obligations are. However, those cases are determined on a case by case basis, and without a legislative test on status, uncertainty continues. Employers require certainty and clarity in how they determine employment status.
It is not only the gig economy which faces challenges on how to treat individuals who don’t fit a traditional employee model. Non traditional working structures are attractive to many companies and individuals but clarity in both contractual arrangements and operating practices is not always achieved and disputes will continue, which may turn companies away from offering a range of engagement options.
The introduction of the Off Payroll Working Rules in the private sector is now biting hard on the contractor/consultant market. We are seeing a renewed focus on employment status as end user clients have to determine employment status and provide Status Determination Statements. Although the “deemed employment” tests for whether an individual is inside/outside IR35 are tax based; the similarities with the employment law tests cannot be ignored. The optics of a determination of deemed employment for tax purposes leads to concern that the logical next step of an “in scope/deemed employment” finding, is the creation of statutory employment rights including unfair dismissal rights for individuals.
Without legislation in place disputes will continue and the consequences of a lack of a statutory employment status test will deter innovative operating models.

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