In the second in a three-part series, PwC employment law partner, Nick Willis, discusses the employment law changes that may be introduced to clarify gig economy worker rights in future.
The landscape is a rapidly developing one, both for gig economy workers and the organisations that engage them.
Changes are coming from a number of different sources, including new cases being heard by employment tribunals, new tax rules and, potentially, major new legislative reforms.
Firstly, a number of cases are progressing through the tribunal system on whether individuals classified as self-employed are, in reality, “workers”, or even employees.
Recent high profile decisions on cycle couriers and cab drivers have been at the employment tribunal level, so do not form binding precedents.
These are being appealed to the employment appeal tribunal, although it may be many months until a clearer picture and more certainties emerge.
Secondly, changes to tax rules from April 2017 affect public sector bodies engaging contractors through personal service companies (PSCs).
These bodies, or agencies engaging a PSC on their behalf, must now withhold tax at source from fees. Even before the rules come into force, this has led to media reports, saying that NHS locum doctors are refusing to work unless PSC fees are increased to cover them for the change. There must be a possibility, at least, that equivalent rules will be introduced for PSCs operating in the private sector.
Thirdly, employment laywers await the publication of the Taylor Review, expected to be this summer. The review was commissioned to consider the sharing economy with its technology platforms and new ways of working outside the traditional employment model. The mandate of the review includes the following considerations.
- Whether the current definitions of employment status need to be updated, given this new economy.
- If the reach of policies such as National Minimum Wage, paid holiday and maternity, and other family rights, have been undermined by working models without standards.
So, can we expect a new, single test on status that will sweep away the decades old line of tax and employment cases?
Formulating such a test would be highly challenging given the huge range of scenarios it would need to cover. And, could a single test be robust enough to cover new business models that do not yet exist?
Changing existing tests would also create short-term uncertainty for both workers and employing organisations. Another more radical solution would be to grant appropriate rights to anyone who “works”, whatever the business model or structure that has been adopted. This could be seen as an extension of the approach being taken for taxing PSCs.
Finally, will Brexit result in changes in the landscape? There have been suggestions that the rules on agency worker rights will be repealed once the UK does not have to comply with EU Directives.
These rules currently give agency workers some parity of treatment with comparable employees of the end user firm in question, after 12 weeks. The rules are unpopular in some quarters, as they can be seen to undermine the existence of a flexible workforce.
However, the prime minister has recently reiterated that workers’ rights will not be affected by Brexit, so change here is probably unlikely in the near future at least.
Whatever the outcome in any of the developments mentioned above, we can be confident of one thing at least. We are going to see more change for the contingent UK workforce in the next two or three years than we have seen in the last 30 years.
Missed the first in this three-part mini series about worker rights in the gig economy? Catch up here.
Nick Willis is a partner in the employment team at PwC
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