Payroll insight
York which focuses on access to health insurance, or the California App-Based Drivers Association which lobbies companies like Uber on behalf of drivers? ● Opportunities for under-represented groups – How can we harness modern employment to create opportunities for groups currently underrepresented in the labour market (the elderly, those with disabilities or care responsibilities)? ● New business models – How can government – nationally or locally – support a diverse ecology of business models enhancing the choices available to investors, consumers and workers? A range of initiatives Whilst there is a clear need to ensure that workers get their due protections and entitlements and that HM Revenue & Customs (HMRC) are properly able to enforce the rules that already exist, the review will also explore how to ensure that these rules are observed. But the Taylor review is simply one of several initiatives recently set-up to tackle the thorny issue of employment status and practices. HMRC have already taken steps to focus resources and expertise to ensure status and employment intermediary risks are tackled. In October 2016, a new HMRC compliance team – Employment Status and Intermediaries – was established to address the ‘risks’ associated with the changing nature of employment. Speaking of the compliance team’s creation, Jane Ellison, financial secretary to the Treasury, said that the government was: “… committed to taking strong action where companies, to reduce their costs, force their staff down routes which deny them the employment rights and benefits they are entitled to. “Employment status in the UK is determined by the reality of the working relationship and not simply by the terms of any contract. “Individuals cannot be opted out of employment rights and protections simply by an engager calling them ‘self-employed’. “Where companies are believed to have misclassified individuals as self-employed, HMRC establishes the facts of the case and will take steps to ensure that all the appropriate tax, [National Insurance contributions], interest and penalties are paid. These include, where necessary, taking individuals and companies to court to force payment.”
Also in October 2016, the Business, Energy and Industrial Strategy Committee launched a separate inquiry into workers’ rights, reflecting growing public concerns over the employment practices of ‘digital economy’ companies, such as Deliveroo and Uber, and the use of zero-hours contracts. The Department for Business, Energy and Industrial Strategy is also to launch the first piece of government- commissioned research into the scale of the gig economy. The project will also look at the motivations of people engaging in gig work. ...traditional employment will eventually become a minority pursuit... Margot James, business minister, said: “The Taylor review is a hugely important step towards us ensuring fairness for everyone in work. Helping us to understand what impact modern employment practices have on workers will inform our forthcoming industrial strategy and also help us ensure our labour market and wider economy works for everyone. “We recognise the importance of being open to new and innovative ways of working – and having a skilled and flexible workforce is part of what makes the UK an attractive place to do business. But it is also crucial that workers receive a decent wage and that people working in all sorts of jobs are able to benefit from the right balance of flexibility, rights, and protections.” Employed versus self-employed With fifteen per cent of those working in the UK’s labour market now self-employed, there has been a rise in the number of people doing gig work i.e. short-term, casual work that is increasingly sought by people through mobile phone apps when they want to work. These roles can include driving, delivering items and DIY tasks. The explosion of ‘disruptive’ businesses, where new ways of working and technology come together to create new products and services to better meet consumer demand, is also leading to a change in working practices. Whilst self-employment and sole trader incorporation arrangements can provide
flexibility for all parties there is also a strong financial incentive at play. The government announced in March 2016 that it would be changing the rules for ‘off payroll’ workers in the public sector, and it is looking increasingly likely that this will be extended more widely. This could impose significant extra compliance burdens on those companies that regularly engage consultants, where the question of whether someone is truly self-employed is not always easy to answer. From April 2017, public sector employers will become responsible for ensuring that any ‘off- payroll’ workers including those engaged through personal services companies pay the correct tax. Recruiters will be under the same obligation where the individual is engaged through an agency. Non- compliance with the rules requiring off- payroll workers in disguised remuneration to pay tax as employees, known as ‘IR35’, is currently costing the taxpayer around £440 million a year, according to the 2016 Budget report. Conclusion The way we work is changing: colleagues can be the other side of the world, and you can set up a business from a smartphone and be ‘self-employed’, while dependent for income on an online platform. We know some of the causes of these changes: business innovation, technological possibility and lifestyle preferences are combining and by and large, the flexibility is popular. But with few people thinking that these trends will reverse, and many predicting that traditional employment will eventually become a minority pursuit, it is vital that the implications of these new working practices on employee rights and responsibilities, as well as on employer freedoms and obligations are considered. Matthew Taylor continues his tour of the UK, hearing from panels of witnesses and engaging audiences in wider discussion and debate. He has stated that his intention is to be open throughout with the direction that his thoughts and recommendations are taking and already the impact of regional differences is demonstrating the huge complexity in this area of law and practice. We expect change will follow as a result of this enquiry so if you get an opportunity to attend at a location near you then please take it and share the view of the payroll professional in this important area of work. n
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Issue 29 | April 2017
| Professional in Payroll, Pensions and Reward |
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