Earlier this week the government published its ‘Good Work Plan’ in which it set out its vision for the future of the UK labour market.

The plan, described by the Business Secretary, Greg Clark, as ‘groundbreaking work’, was developed in response to the government-commissioned ‘Taylor review of modern working practices’ in 2017. 

It has been cautiously welcomed by IPSE, the contractor lobbying body, that has said it appears to ‘preserve the flexibility people crave’ and doesn’t ‘snuff out the entrepreneurial spirit of people who want to strike out on their own.’

Of the 53 recommendations made in the Taylor review, the government has said it will take forward and implement 51, as it commits to improving the quality of all work in the UK. 

With new promises to protect gig economy workers and a pledge to make rules around employment status more transparent, the Good Work Plan contains a number of developments relevant to freelancers, contractors and the self-employed. 

We’ve highlighted some of the plan’s key points below and have explained below what they could mean for you and your business.

Clarify employment status

The Good Work Plan recognises that greater clarity is needed around employment status, describing it as ‘central’ to ensuring workers and employers are both able to benefit from flexible working arrangements.

As part of the announced changes, employers will be required to provide a ‘mandatory statement’ to all workers, which would outline their rights from ‘day one’. This would include; information on start and end dates, holiday and sick pay allowance and working hours. 

After a number of high profile Deliveroo, Uber and Pimlico Plumbers employment tribunals, the government believes that a written statement will offer transparency to both parties and protect gig economy workers in particular.

Improve employment status tests 

Existing employment status tests such as CEST, have, according to the Taylor review, ‘contributed to a lack of clarity’. 

In a contractor’s case, problems with the tools used to determine employment status and or IR35 status can result in them having it incorrectly set. In the public sector, this means many contractors have been wrongly classed as ‘inside IR35’ and have therefore been overtaxed. 

As part of the Good Work Plan, the government intends to ‘improve the guidance and online tools available to help people understand their status.’

The government also agreed with Matthew Taylor’s view that ‘Control’ (one of the key factors considered when setting IR35 status) should play a bigger role than ‘Substitution’ when determining status. However, we will have to wait and see as to whether this will result in actual changes to the IR35 legislation. 

Align employment status and tax frameworks

Last year, the Taylor report said having a separate framework for employment status for the purposes of employment rights and tax is confusing and results in non compliance. The government agrees and has said it will look into resolving this.

This is an issue affecting many contractors. After the arrival of IR35 reform in the public sector, there has been a rise in contractors working inside IR35 and considered employed for tax purposes. Many contractors believe they should be offered employment rights in return for paying more tax. 

With IR35 changes due to be introduced in the private sector in 2020, the government has responded to increasing pressure and said it will bring forward detailed proposals on how aligning the two would work in practice.

Scrap the ‘Swedish derogation’ 

This loophole allows companies to pay agency workers less than permanent employees. As part of the Good Work Plan, the government will ban this type of contract and has said it will guarantee that agency workers will be paid the same as permanent staff in comparable roles.

Eliminate ‘one-sided flexibility’

The government has taken on board Matthew Taylor’s suggestion that a minority of employers abuse the rules when engaging a worker and transfer ‘too much risk to the individual’. To tackle this, legislation will be introduced that gives all workers the right to ‘request a more predictable and stable contract.’ 

This means the many zero hour workers in the UK will be able to ask for a fixed working pattern after more than 26 weeks of service, offering them greater financial stability.

Quadruple the max tribunal fine 

By raising the maximum tribunal fine from £5,000 to £20,000 for employers found to be ‘showing malice, spite or gross oversight’, the government hopes to protect vulnerable workers through ‘fairer enforcement’ of a company’s obligations.

Expand remit of Employment Agency Standards

The government has given the Employment Agency Standards more freedom to investigate complaints involving an umbrella company. The document recognises that higher paid professions are well served by umbrella companies, but has concerns about lower paid workers operating through these arrangements. Through expanding the Employment Agency Standard’s remit, the government aims to prevent situations where agency workers have not received adequate pay from these umbrella companies.

In the coming months, the government is expected to outline how it proposes to implement many of these changes which, on the whole, have been welcomed by the likes of the CBI and IPSE.

Andy Chamberlain, Deputy Policy Director at IPSE, praised the government for listening to calls to simplify employment status but was also quick to point out that self-employed workers, such as contractors, must be able to continue to operate with total freedom.

“The devil, of course, will be in the detail, and the government must ensure it doesn’t legislate people out of self-employment against their will.”

You can read the Good Work Plan in full here.

Nixon Williams' Thoughts

The government taking forward 51 of the 53 recommendations from the Taylor Review is a promising sign towards how the government are considering the contingent workforce. We believe that any steps towards compliance and fairness for all of the UK workforce can only be a positive.