Government has ruled out changes to the definitions of worker status for tax purposes

It has taken four years for the government to respond to the 2018 consultation on worker status which sought views on the employment status framework, focusing on its complexity, the fact that it was open to interpretation, and the difficulty to resolve disputes and alignment between the frameworks for tax and employment rights.

Following a consultation on potential reforms, it is clear there will be no change to the current position, with the government stating: ‘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, it might create cost and uncertainty for businesses in the short term, at a time where they are focusing on recovering from the pandemic.’

In the responses to the consultation, there was criticism of the current employment status tests which many described as outdated and not relevant to modern working practices, while some respondents thought that current employment status tests do not cover enough factors to encapsulate changes in ways of working practices.

Where respondents were in favour of legislating the current employment status tests, the vast majority said that mutuality of obligation should be a relevant factor for employee status. However, the majority of respondents were not in favour of codifying the current status test.

Of those who said that an alternative legislated test would be preferable, the majority said that mutuality of obligation is not relevant. However, there was not a clear consensus on what an alternative legislative test should look like.

To provide greater clarity for businesses and individuals on the correct legal interpretation of working time for National Minimum Wage purposes for platform workers, the government is updating its ‘Calculating the Minimum Wage’ guidance.

Individuals working in the gig or platform-based economy will be entitled to the minimum wage if they are considered a worker for minimum wage purposes. Once an individual is deemed to be a worker, their working time needs to be calculated. The guidance describes times that are likely to count as ‘working time’ for gig economy workers, such as waiting for a customer after accepting a job.

Dave Chaplin, CEO of IR35 Shield said: ‘The report makes for very disappointing reading. After spending over four years since the consultation closed on 1 June 2018, the government has carefully considered all 162 responses and published a 32-page document which effectively says, “We have decided to do nothing”.

‘Employment status is complex, and as previous governments have done, this topic is being filed into the “too difficult to deal with” drawer.’

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