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Published on 31 May 2018

LITRG response: Employment status

LITRG welcomes the opportunity to respond to this consultation on employment status and, in particular, is pleased that the consultation considers employment rights and tax issues together. The fact that there are 64 questions in this consultation, speaks to the enormity and complexity of the topic. In our response to the section of the consultation looking at tax status, we focus on the issue of the ‘false’ self-employment of low-paid workers.

We set out that the tax/NIC burden differential between the statuses means distortive hiring behaviour is inevitable. However, a less subjective definition of the borderline, better guidance so that workers can understand the rules/distinction and more robust enforcement on HMRC’s initiative would help cut down on the exploitation of vulnerable workers. All these elements are key; a response missing any one of these, will simply be ineffective in the long run.

In the remainder of our response (amongst other things) we:

  • highlight that some specific status issues for ‘accidental’ employers, e.g. disabled people seeking to engage the services of a carer
  • put forward that an enforcement body such as the Gangmaster’s Licencing and Abuse Authority could pay short shrift to ‘worker’ problems such as the use of sham substitution clauses in contracts
  • suggest that statutory payments such as sick pay, are made available to all those with ‘worker’ status, whether or not they are also treated as employees for tax purposes and paid under PAYE
  • state that there is no reason to apply different definitions of employment/self-employment across other regimes that have the binary distinction, e.g. tax credits and UC.

The consultation documents can be found on GOV.UK.

Our response can be found here: Employment Status – LITRG response

Meredith McCammond

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