The Government has presented me with a dilemma; no not the one about the new incumbent at No. 10 Downing Street. This is a dilemma of considerably less significance but one which I have the power to act and change the outcome. If only the situations were reversed! My dilemma is this; the Government has published its response to their June 2018 consultation (a pandemic and two prime ministers ago) about the need for greater simplicity and transparency in identifying employment status. Do I ignore a response that offers very little assistance in this area for employers or workers alike or do I, as any good private services lawyer should, pen a short informative piece so that at least we all know the Government's intentions or lack thereof? I chose the latter course of action so here are the headlines;
- No new legislation to assist with employment status - the Government believes that any legislation would limit the ability of the courts to rule against unscrupulous employers. The Uber Supreme Court judgment (read our ebriefing here) provided, in the Government's opinion, useful clarity and demonstrated the vital role of the courts.
- Updated guidance - in the absence of legislation and to ensure the 'employment status system remains flexible and continues to adapt to modern working practices', the Government has updated its guidance for employment status in three parts (HR and legal professionals, individuals and employers)* and is still updating its guidance 'calculating the minimum wage', specifically issues relating to 'working time'. Whilst the guidance does not address specific issues it does provide useful generic information.
- CEST remains the 'go-to' tool - the Government is happy with the HRMC's Check Employment Status for Tax (CEST) to help support status determinations. So no comfort for users of CEST who can find multiple different answers when they type in the same information!
- Tests for employment rights and tax status remain separate - there will be no alignment between the tests for employment status for employment rights and tax purposes. A promise to consider how to improve the employment status tests for tax purposes over the long term is as good as we get.
Given the vacuum of power for the Government at the moment and the threat of recession, it is hardly surprising that it is unwilling to embark on a full-scale review of employment status. Many employers may be relieved as a new draft of legislation may create another burden they would not welcome. As ever, please do contact us if you have any specific status issues and do watch out for an invite to our employment law update in October 2022 where we will look at this issue and recent case law.
Now is not the right time to overhaul the employment status frameworks for rights and for tax but we are delivering greater clarity around the frameworks for individuals and employers by publishing guidance for status and working time for minimum wage purposes.