Employment Law: Employment Status - The Government's Response | September 2022
Following the 2017 Taylor Review and subsequent recommendations in the 2018 Good Work Plan, the Government has launched a consultation exercise to look into the issue of employment status and whether they should or could provide more clarity on this important issue.
In response to the consultation, which involved discussion from a range of trade unions and businesses, there was general agreement that there are issues with the current employment status framework. However, there was no general consensus on how to reform it.
The government acknowledged that there are problems with the current system and the different statuses remain unclear in many areas. What further complicates this is that, whilst the employment system has three statuses, the tax system only has two – self-employed and employed. The government determined that the three-tiered system of employment status is still relevant and as an outcome they have decided against developing a new system via any legislative reform.
Whilst it could be said to be a disappointing outcome, the government instead published guidance on the 26th July 2022 for employers, individuals and Human Resource professionals on this key litigious area of employment law. The definitions of status therefore remain and can summarised as follows:
- Employee: where it can be determined that a contract of employment exists. Employees are entitled to all employment rights subject, where appropriate, to qualifying periods and sometimes other qualifying criteria.
- Limb (b) worker: where it can be determined that any other contract by which the individual performs work or services personally for someone else (unless the individual is working on a genuinely self-employed basis for a client or customer) exists. Limb (b) workers are entitled to core day 1 statutory employment rights.
- Self-employed: not defined in the legislation but best understood as people who carry on a profession or business on their own account and enter into contracts with clients or customers to provide work or services for them and/or are not obliged to do the work they contract to personally an employee who has the most rights and responsibilities;
The guidance provides a quick ‘at a glance’ guide to what the employment rights eligibility are to each of these groups and in addition, the guidance created specifically for Human Resource professionals aims to help by outlining how to comply with the rules and regulations, and by providing additional clarity on the different employment statuses including how to determine them and the rights they each have.
It is doubtful that this guidance will bring an end to any future cases going to Employment Tribunals, as each scenario will still need to be determined on its own merits. However, whilst the outcome of the consultation does not achieve what many hoped it would, it can be said to be a starting point.
The full guidance can be found at: https://www.gov.uk/government/publications/employment-status-and-employment-rights
NB: The above information is for general guidance only and is not legal advice. It should not be regarded or relied upon as a complete or authoritative statement of the law. However, if you have any HR issues on this or any other HR matters and would like to talk them through with our team, please contact us.
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