Should the government press ahead with further IR35 reform without legally clarifying the distinctions between employees, independent or self-employed professionals and more vulnerable contingent workers, flexible workers may well start demanding full employment rights if they are shoehorned into the “inside IR35” category.
This is the latest warning from Qdos Contractor, the leading tax advisory service for contracting professionals.
In a new company blog, Qdos broadly applauds government proposals to protect millions of vulnerable British workers as detailed in its response to the Taylor Review, the recently-published “Good Work plan.” This aims to provide rights for every worker in the UK – an ambition Qdos endorses because it acknowledges that the UK’s 883,000 zero hour contract workers and the fast-expanding gig economy workforce do require protections.
However, gig economy workers, the blog notes, are unlike highly skilled contracting professionals because they sit somewhere between self-employment and employment yet receive no employment rights. The government’s new plan will grant millions of British contingent workers holiday pay and sick pay for the first time. But for skilled contractors, this is arguably not the kind of freeform they are seeking.
The article continues:
“… there are fundamental differences between independent contractors and gig economy workers. And while the two might fall under the umbrella of self-employment, their roles, earnings, and needs are typically quite different. For example, an Uber driver or a Deliveroo rider might need employment rights. But in many cases, skilled contractors working through their own limited companies (PSCs) are able to command much higher day rates and perhaps do not want nor need such benefits.”
At present, the article notes, the UK’s contractors are not arguing for employment rights, at least not at present. The continuing uncertainty and speculation over the extension of public sector IR35 reforms to the private sector suggests that for independent professionals, it is the tax system that deserves reform. But should an additional roll-out of IR35 rules occur in the absence of updated legal clarifications of tax and employment/vulnerable worker/independent status, skilled contractors may indeed begin pressing for full employment rights by jumping aboard the Good Work Plan.
A significant proportion of independent contracting professionals already enjoy these rights by working via reputable PAYE Umbrella Companies, which provide full statutory employment protections. But, according to Qdos, those who wish to pursue their careers via their own personal service companies may be inclined to begin demanding these rights if an IR35 extension forces them to pay much higher employee income tax on their earnings.
Contractors are among those being invited to make their views known in the recently published government consultation on employment rights, available here.