The government has at long last published a response to the 2018 consultation on employment status, issued following recommendations made by the Taylor Review. The consultation sought views on whether changes to employment and worker status law would achieve greater clarity and certainty, and whether the tax and employment tests for status should be aligned - in light of the often confusing and inconsistent approach taken by the Employment Tribunals/Courts and HMRC/the taxation Trbunals.
The government considered 162 formal responses to the consultation from a variety of organisations, including trade bodies, trade unions, business and some individuals. The vast majority of respondents - not surprisingly - agreed that there are issues with the current employment status system. It is hard to understand why anyone would suggest the current system is helpful. However, there was little consensus on what action the government should take to address the concerns. Respondents agreed that there is no easy solution, and that it would be complex to implement any legislative reforms.
The government has therefore decided not to implement any changes to the status quo, but has published three sets of new guidance designed to improve clarity around employment status - for employers and engagers, for individuals and for lawyers/HR professionals. The non-statutory guidance includes an explanation of the differences between employees, workers and self-employed individuals, discusses the key factors in determining employment status and provides examples based on hypothetical scenarios. The three sets of guidance can be found here:
On the proposed alignment between the tests for determining tax and employment status, most respondents did favour alignment of the tests, but there was no consensus on how this should be achieved. The government recognises that there could be some benefits to greater alignment. However, noting the lack of consensus, the ongoing economic recovery from the pandemic, and the wider economic context, it has concluded that now is not the right time to implement alignment.
So, after four years or so of debate and review on this important issue, we are...as we were!
