HMRC release Employment Status Report

At the same time, the government has released its response to the recent working status consultation. The consultation sought to explore in a greater level of detail how wider employment status reform, including recommendations from the Taylor Review, could work, both in legal terms and in relation to the realities of the modern labour market, as well as seeking to understand the potential impacts and implications of those proposals.

It also considered whether there are alternative approaches that could better achieve the aims of providing individuals and businesses with greater clarity and certainty.

For both the employment rights and tax frameworks, the consultation considered the legislative tests that define the boundaries between the different statuses. It did not consider the issue of reforming the rights themselves, creating new rights or changes to the National Insurance Contribution (NICs) rates or reliefs.

However, the consultation did consider a related issue of what constitutes working time for the purposes of National Minimum Wage/National Living Wage (NMW/NLW), specifically for those working via an online platform. This week see’s the release from HMRC of their report on employment status in the UK.

This report examines the UK employment status regime as of early 2019 when the research was completed. The analysis and conclusions drawn from the research may therefore not reflect the current UK labour market and should be viewed in this context especially given the changes we’ve seen due to coronavirus.

Employment status categorises people as self-employed, limb workers (individuals who perform work but are not conventional employees and do not have an employment contract) or employees for employment rights purposes.

In October 2016, the Prime Minister commissioned Matthew Taylor to conduct a review into modern working practices. His report, Good work: the Taylor review of modern working practices, made several recommendations. As part of the response to the Taylor review, the government published a consultation on employment status.

Following this consultation, in December 2018, the government published the Good Work Plan, which outlined responses to Matthew Taylor’s recommendations. Since the Good Work Plan was published, the coronavirus pandemic has significantly impacted the UK economic and labour market context, and uncertainty in the global economy has led to increased costs for businesses.

The government must therefore take this into consideration before embarking on policy reform to employment status. A number of areas from the aforementioned plan also sit within the Employment Bill which was unfortunately not included in this government terms decisions.

This independent research aimed to understand the number and characteristics of individuals who are ‘workers’ – that is people who under the Employment Rights Act 1996 are either employees or limb workers. Participants were screened over three months in late 2018 and into early 2019. They were asked a short initial set of questions – based on case law – to determine whether they were likely to be an employee or self-employed based on a limited number of considerations.

People who were not in paid work1, or whose responses indicated that they were very likely to be an employee or self-employed were screened out. This is because their employment status was not likely to need any further analysis to ascertain.

The remainder, whose employment characteristics did not point as clearly towards a particular status, then answered a more detailed questionnaire, which generated findings within the time and budgetary constraints of the research.

Overall, 14,908 people were initially screened, and 1,423 took part in a full interview. People who took part in the full interview were the ‘screened in’ group.

The core objectives of the research were to:

1. Estimate the number of individuals in the overall UK workforce, as of early 2019, who were likely to have ‘worker’ (employee or limb (b) worker) status.
2. Assess what employment status was assigned to individuals who, based on the criteria, were likely to fall into the worker category.
3. Identify the demographic and economic characteristics of individuals who could have been classified as ‘workers’ – for example, their gender, age, income, earnings, and industry sector.

The full review can be found?here:

At the same time, the government has released its response to the recent working status consultation. The consultation sought to explore in a greater level of detail how wider employment status reform, including recommendations from the Taylor Review, could work, both in legal terms and in relation to the realities of the modern labour market, as well as seeking to understand the potential impacts and implications of those proposals.

It also considered whether there are alternative approaches that could better achieve the aims of providing individuals and businesses with greater clarity and certainty. For both the employment rights and tax frameworks, the consultation considered the legislative tests that define the boundaries between the different statuses.

It did not consider the issue of reforming the rights themselves, creating new rights or changes to the National Insurance Contribution (NICs) rates or reliefs. However, the consultation did consider a related issue of what constitutes working time for the purposes of National Minimum Wage/National Living Wage (NMW/NLW), specifically for those working via an online platform.

Details can be found?here: