U.K.: Government Seeks Clearer Distinction Between Employee, Worker, Self-Employed

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By Ali Qassim

The British government is seeking views on how it can clarify employment status rules to make it easier for businesses to understand whether individuals they hire for work should be classified as an employee, a worker, or self-employed.

‘Wasting Time'

With more citizens working for gig employers like ride-hailing service Uber Technologies or Amazon.com’s fast-delivery service, businesses need more clarity about workers’ legal status to determine which employment rights and tax obligations apply to them. Without greater clarity, according to the government consultation document, businesses may be “wasting time and energy trying to understand the rules,” while allowing “unscrupulous employers and individuals to game the system in order to save on employment costs and taxes.” According to the government. for example, many large gig-economy companies are currently designating workers as self-employed to limit any holiday or sickness pay due them and to reduce employment tax liabilities.

One of the highest-profile examples of this issue is the 2016 Employment Tribunal ruling that Uber drivers in the U.K. are entitled to basic workers’ rights like minimum wage and paid vacation. But attorneys widely agreed that even this landmark ruling fails to clearly distinguish between employees and contractors.

Among other things, the government is seeking comment on whether the definition of “worker” in existing legislation is confusing because it covers both employees and workers and has proposed renaming the category of people who are eligible for worker rights but are not employees as “dependent contractors.”

Industry Approval

Employment associations have widely welcomed the four-months-long consultation. Kevin Green, the chief executive of the Recruitment and Employment Confederation, for example, pointed out that “the way we work is undergoing drastic changes and it’s high time that regulations around the gig economy are aligned with other flexible workers.”

Chris Bryce, the CEO of the Association of Independent Professionals and the Self Employed, agreed that “the world of self-employment has been shrouded in confusion for some time because of the lack of clarity about employment status,” and Tania Bowers, general counsel for the Association of Professional Staffing Companies, said her lobby group is “very supportive of the Government’s desire for clarity—particularly on employment status and how this is aligned to tax status, workers’ rights and entitlements, and the differentiation between employed, workers, and self-employed.”

To contact the reporter on this story: Ali Qassim in London at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

The Employment Status Consultation is available here.

For more information on British HR law and regulation, see the U.K. primer.

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