Employment law is certainly not a simple field, so it is perhaps not surprising that this year is seeing a number of complex issues being grappled with. The role of self-employment in the UK legal landscape, in particular, is something the government seems keen to examine. Some of the key issues that have been or are set to be tackled this year include:
The Role of the “Worker”
The UK’s current body of employment law seems to have developed some tangles which the government now hopes to tease apart. Specifically, complications have arisen as a result of the “worker” as a concept that exists in law. This is a concept that is separate from, yet overlaps with, both employees and the self-employed. All employed individuals are also workers. Some self-employed people are workers too, but not all – even if they are subject to PAYE.
A worker shares many of the rights of an employee, such as minimum wage and holiday pay, but also lacks some of the rights that the self-employed also lack. The appearance of the worker has not only added a new group to the mix, but made it harder to distinguish where one of the other groups’ ends and the other begins, with some groups of self-employed people having to turn to the qualified employment lawyers and an employment tribunal to work out which group they belong to.
Self-Employment and Tax
Over 15% of the UK population is self-employed, according to data from the Office for National Statistics (ONS), and this figure is usually welcomed as a sign of an entrepreneurial culture. However, HM Revenue and Customs (HMRC) is apparently more dubious, and in particular is concerned that it might indicate people who are, in practical terms, employees opting for self-employed status in order to gain a tax benefit. While decade-old IR35 regulations were intended to tackle this, but HMRC believes that the “personal services companies” section of these laws, dealing with those who offer their individual services through a limited company, could be being abused to the tune of £400 million of dodged tax per year. From April this year, changes will come into effect designed to close this apparent loophole and bring such individuals within the scope of PAYE.
Synchronisation of Tax and Employment Law
Another crease which, it is hoped, may soon be ironed out is the fact that employment law is not fully in sync with tax law in some areas. In particular, it is entirely possible for IR35 rules to deem a person to be an employee for tax purposes while they are considered self-employed in all other respects. Aside from the simple lack of consistency, the problem with this situation is that it results in people falling under PAYE and losing some of the tax benefits they would gain from being self-employed, yet failing to gain any of the benefits that come with employment such as sick pay, paid leave, notice periods, and protection from discrimination.
Peter Scully
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