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Future of Work review: What about the self-employed?
- 23 Jun 2022
Last month, the government announced the launch of its review into the future of work, covering a number of far-reaching topics, such as how the country can navigate the aftershocks of the pandemic, and how it can equip itself to meet its levelling up and Net Zero ambitions. But importantly for the self-employed, it also opened the door to long-awaited progress on the Taylor Review recommendations.
Following the announcement, IPSE met with Matt Warman MP, who is leading this review, where we discussed a series of ongoing issues affecting freelancers and the self-employed including IR35 and confusion surrounding employment status rules. Further to this, we recently submitted our full written evidence in response to the review – here’s a summary of what we put in our letter.
Clear up confusion around employment status
The lack of a clear understanding of what ‘self-employment’ is, as well as a lack of alignment between employment and tax status, has created mass confusion for businesses and freelancers alike. End clients now find it more difficult to determine if their workers should be treated as employees or independent businesses, often relying on HMRC’s CEST tool, which has been subject to criticism across the contracting sector.
Despite the best efforts of businesses over the past year, thousands of freelancers have faced blanket determinations and blanket bans by their clients, with little recourse to challenge determinations they disagree with.
Similar difficulties can be found in HMRC’s recent investigation into Managed Service Companies, with as many as 2,000 contractors now fighting to prove their status as independently managed businesses.
We believe that much of the confusion and uncertainty could be abated by updating employment legislation to reflect modern working practices, with clearer information on what a self-employed engagement looks like, helping businesses and workers to better understand their rights and obligations.
Focus on skills and infrastructure
As part of the government’s levelling up agenda, we highlighted the need to ensure the self-employed can also access opportunities to upskill and reskill. In particular, reforming the apprenticeship levy and extending a tax allowance for investment in new skills for the self-employed could encourage more of the self-employed to take time away from projects to focus on updating their skills.
Continued investment in digital and transport infrastructure, particularly in rural areas, as well as incentivising the growth of smart workspaces and Workhubs, could also enable towns and cities across the UK to support freelance sector growth, whilst supporting high street renewal and lowering carbon emissions.
Tackling poor payment practices
With IPSE research finding that self-employed workers spend an average of 20 days each year chasing unpaid invoices, we wrote about the need for prompt payment to be a key feature of self-employment. We believe that if this issue isn’t tackled by the government, then this will constrain cash flows, limit opportunities to invest and force people out of one of the most dynamic and innovative parts of the UK economy.
We proposed a standard payment term of reimbursement within 30 days from the date of invoice. In addition, we highlighted the promising trial of an online dispute resolution platform, which could see payment disputes between small and large companies resolved more efficiently whilst reducing the workload of the legal system. Thirdly, we proposed a requirement for medium and large-sized businesses to report their payment practices to shareholders and board directors, creating further incentives for transparency and accountability for payment practices.
Whilst we await the outcome of this review, we will continue fighting for improvements in all these areas and more.
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