Government responds to consultation on employment status


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The government has published its response to the 2018 consultation on employment status.  The consultation came out of the Taylor Review of Modern Working Practices which was published in July 2017 and considered a range of issues, including the implications of new forms of work, and the impact of new working methods on employee rights, responsibilities, freedoms and obligations.

It made a number of recommendations and in February 2018 the government published its response to the Taylor Review in which it accepted that there is a lack of clarity surrounding the tests for employment status, and that an online tool could be useful in helping determine employment status. It then launched a consultation, to which it has now responded.

The government has said it will not implement any legislative reform on employment status, though it acknowledges that there are problems with the current system, including that the boundaries between the different statuses can be unclear for some individuals and employers. It has concluded that the benefits of creating a new system are currently outweighed by the risk associated with legislative reform. Although reform may bring clarity in the long term, it might create costs and uncertainty for businesses in the short term, at a time when they are focusing on recovering from the pandemic.

The government has issued three pieces of non-statutory guidance on employment status. The first detailed status guidance is for HR professionals, legal professionals and other groups, the second is support for individuals, and the third is a checklist for employers and other engagers. BEIS has also updated its guidance, 'Calculating the minimum wage', to add new sections on the gig economy and platform-based workers.

The government has confirmed that there will be no alignment between employment and tax frameworks. It has decided that now is not the right time to bring forward proposals for alignment due to lack of consensus and the ongoing economic recovery from the pandemic, however it will work with stakeholders to explore longer-term options to improve the employment status system for tax to ensure that it is as clear as possible.

The government has also confirmed that it does not intend to introduce an online tool, similar to the Check Employment Status for Tax (CEST) tool, to help determine employment status. It had previously accepted the Taylor Review's recommendation that such a tool would be useful.

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