25 Mar 2018

Employment status consultation

14 March 2018

Status anxiety


  • Determining employment status depends on loosely defined factors, case law and guidance.
  • Government committed to improving clarity on assessing status after the Taylor review.
  • Employment status consultation document explores the possibility of legislating the main principles of the tests of employment.
  • An alternative might be an employment status tool.
  • Should dependent contractors be taxed in the same way as employees?

Until recently, it has been relatively clear whether an individual was employed or self-employed. Factory-machine operators fell into the former category, while jobbing tradespeople the latter.

The proportion of jobs that are carried on under typical master-servant relationships are diminishing, however, and many new working practices are emerging. On the face of it, the number of self-employed people is rising, but it is not always apparent how those adopting some of the more innovative approaches should be viewed in light of traditional employment status tests. Determining employment status has been an area of growing complexity and ambiguity for many years.

The difference between the cost to a business of taking on an employee and engaging a self-employed individual has never been starker. The financial costs of being an employer include employer’s National Insurance contributions, possibly the apprenticeship levy and employer’s pension contributions. As well as these, they are obliged to withhold tax at source and deal correctly with myriad employment rights. Those who engage self-employed individuals do not have to concern themselves with these issues. They also have the benefit of greater flexibility on ...

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