Off-Payroll Working Rules for Private Sector – Government Update

Government released further information on 5 March 2019, via a consultation document, in relation to the changes to the Off-Payroll Working rules for private sector business.

 The key points from the consultation document are as follows:

1.      Government intends to replicate the public sector rules introduced in April 2017, whilst addressing some stakeholder concerns

2.      The concerns being addressed are:

a.      Lack of legislative requirement to pass the end-client’s determination (and reasoning for it when requested) of whether the rules apply all the way down the contractual chain – a requirement to pass both all the way down the contractual chain will be legislated for

b.      Disagreements with the end-client’s determinations – Government proposes to legislate for the end-client having to have a process to address disagreements

c.      End-client making blanket decisions

3.      The consultation considers adding an obligation to the end-client to give the determination to the worker as well as the person it contracts with directly

4.      Government is considering transfer of debt up the chain, in the instance it cannot collect liability from the fee-payer, for example, in the instance that the fee payer ceased to exist; it is also considering transfer of debt to office holders of the fee-payer, and those who do not meet their responsibility to pass on determinations down the chain

5.      The Companies Act definition of small will be used for companies to be exempt from the rules for the private sector, with a slight adoption for non-corporate entities; the exemption will apply to the ‘end-client’ not the agency/fee-payer

6.      CEST (Check of Employment Status Tool) will be enhanced and improved

7.      The consultation provides ‘actions for businesses to take now’ to proactively prepare for the new rules as follows:

1. Identify and review their current engagements with intermediaries, including PSCs and agencies that supply labour to them
2. Review current arrangements for the use of contingent labour, particularly within the organisation functions that are more likely to engage off-payroll workers
3. Put in place comprehensive, joined-up processes (assess roles from a procurement, HR, tax and line management perspective) to get consistent decisions about the employment status of the people they engage
4. Review internal systems, such as payroll software, process maps, HR and onboarding policies to see if they need to make any changes

If you would like to discuss, please feel free to contact me or a a member of the Employment Services team at Dains.