- employment status and how it determines the employment rights individuals are entitled to and for which employers are responsible;
- factors determining an individual’s employment status;
- special circumstances and recent developments in the labour market;
- how employment status should be determined for different sectors; and
- where to go for further information.
The new guidance has been published alongside two additional pieces of guidance:
- Checklist for employers and other engagers - This checklist aims to help employers and engagers understand individuals’ employment status, so they comply with the law. This helps ensure individuals receive the rights they are entitled to, and to avoid unnecessary disputes and associated costs.
- Support for individuals - This guidance for individuals helps them understand their employment status. As a result, they know their rights, can have informed discussions with their employer about them, and can take steps to claim them and have them enforced where necessary.
The government’s response to the employment status rules for employment rights and tax consultation, published by BEIS, HMT and HMRC on 7 February 2018, is part of the government’s response to the Taylor ‘Good Work’ report.
Overall the government recognised that the employment status framework for rights works for the majority of individuals, but boundaries between the different statuses could be unclear for some individuals and employers. The consultation also explored alignment between the employment tests used for tax and employment rights.
In its response, the government concluded that:
- The benefits of creating a new framework for employment status are currently outweighed by the potential disruption associated with legislative reform. Although such reform could help bring clarity in the long term, the government is worried that it may create cost and uncertainty for businesses in the short term, at a time where they were focused on recovering from the pandemic.
- The lack of consensus around alignment between tax and employment rights, the ongoing economic recovery from the pandemic, and the wider economic context means that now is not the right time to bring forward proposals for alignment between the two frameworks. The government stated it would, however, work closely with stakeholders to explore longer-term options to improve the employment status system for tax to ensure it was clear and usable for all parties.
ICAEW’s Tax Faculty responded on 25 April 2018 (ICAEW REP 45/18) to the employment status consultation.
The faculty said – and still believes – that the government should encourage and facilitate an informed national debate to determine sustainable long-term solutions for employment rights and tax/national insurance contributions (NIC) in the modern world of work. The current situation for employment rights, pensions and tax/NIC etc. is one of multiple definitions. This position is unsustainable in the medium to longer term.
Such a debate would consider the future of how work should be taxed, together with the associated rights and benefits.
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
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