Flexible labour- taking control of your dynamic workforce

This afternoon the Chancellor announced that the Government is going to cover up to 80% of the current wage level of an employee who is designated as a “furloughed” worker, due to the Coronavirus pandemic, provided they are kept on the employer’s payroll. There will be a ceiling of £2,500 a month on salaries to which this applies. Employers can still top up salaries above this level if they choose to.

Yesterday we reported that, against the backdrop of the challenges posed by the Coronavirus (COVID-19), the Government has announced that implementation of the new IR35 off payroll working rules, which are to apply to large and medium sized businesses in the private sector, are to be delayed from 6 April 2020 until 6 April 2021. The Government has been clear that this is a deferral and not a cancellation.

Against the backdrop of the challenges posed by the Coronavirus (COVID-19), the Government announced last night that implementation of the new IR35 off payroll working rules, which are to apply to large and medium sized businesses in the private sector, are to be delayed from 6 April 2020 until 6 April 2021.

The Government has just published the results of its review of IR35 and has also released various checklists and guides to support implementation.

On 22 January  HMRC issued long awaited draft regulations for technical consultation which would allow unpaid PAYE debts under the forthcoming IR35 reforms (to be implemented from 6 April 2020) to be recovered from other "relevant persons" further up the supply chain.  Broadly equivalent draft regulations have also been published with respect to NIC debts.

Flexible working is on the increase across all sectors. More and more we're seeing organisations choose to engage with a contingent workforce. Automation, A.I. and technology are accelerating the pace of change, by offering a more open and innovative way in which organisations and workers can come together and work flexibly. However there are several operational and legislative challenges that organisations need to navigate when engaging with a flexible workforce.

Following the politics of pre-election pledges, a pre-implementation review of the proposed changes to IR35 has now been launched by the new Conservative Government.

The Government has announced that it will be carrying out a review into the planned April 2020 changes being introduced around off-payroll working (commonly known as "IR35").

On 25 November 2019 HMRC issued a new version of their Check Employment Status for Tax (CEST) tool. The tool is designed to give businesses who engage contractors who operate through Personal Service Companies guidance on status for employment tax purposes and is being used with a much greater frequency given the upcoming changes to the off-payroll workers rules (IR35) which will apply from 6 April 2020.

New rules due to come into force from April 2020 mean that medium and large companies engaging NEDs (including Chairmen) who invoice for their services via an intermediary (most commonly their own Personal Service Companies or “PSCs”) will need to operate PAYE and NICs on fee payments made to them. In advance of these rule changes, businesses will need to think critically about how they communicate with their NEDs.

At Autumn 2018 Budget, the Chancellor announced the Government’s intention to extend the off payroll working rules introduced for the public sector to most private businesses from April 2020. Businesses will need to implement processes not only to determine employment status but also to document and communicate the reasons behind the decision.

We are delighted to invite you to our upcoming Preparing for the Off-Payroll Working (IR35) Rules seminar. The revised rules will become effective from April 2020.

We are delighted to welcome representatives from the Department for Business, Energy & Industrial Strategy (BEIS) who published this consultation to a roundtable event in our PwC Manchester office on Tuesday 1 October. This roundtable will allow you to share your thoughts and feedback with the Government and ask questions directly. It will also provide a forum to share and discuss queries with other employers.

As part of the next stage of the Government’s Good Work Plan, a consultation has been announced proposing the establishment of a new single enforcement body (SEB) for employment/worker rights.

In this webinar, experts from PwC discuss progress with regulatory reform, delve into the complexity of the current legislation and provide practical advice on how to manage risk as the legislation evolves (including the recent NMW consultation), all brought to life with a number of case studies.

The Government has published its final proposals for reforming the off-payroll working rules from April 2020 for the Private Sector and while the public sector legislation has fundamentally been mapped across to the private sector, there are some additional changes which Public Authorities will now need to incorporate in how they manage and comply with these new changes.

The Government has now published its response to the off-payroll working rules consultation and associated draft Finance Bill clauses. Going forward, the rules for the Private Sector and Public Sector will generally be aligned in treatment, other than for small Private Sector businesses which will be exempt.

We wanted to bring to your attention a recent development around the “naming and shaming” regime which publishes names of those employers who breach National Minimum Wage (NMW).

Based on feedback and requests from some of the UK’s largest retailers, we are running a practical session on what the new ‘off-payroll working in the private sector’ rules will mean for employers in the retail industry.

Changes continue to happen at an unprecedented pace in the employment space. We know that the HR and Finance teams across employers are working hard to keep up to speed with these changes and what they will mean in terms of cost, operations and risk. With this in mind, we have organised a number of seminars for employers to help them get up to speed with these latest changes.

The government’s Good Work Plan runs to 68 pages, takes forward 51 policy recommendations and for any industry with a large workforce will mean significant change which creates costs and risk.

The UK Government is working to slowly implement the ideas set out in its Good Work Plan issued in December 2108 on the protection of workers in the gig economy and others with non-typical working arrangements. There are new laws in place as from this month on the contents of payslips. Further legislation is coming into force in April 2020 around such areas as an entitlement for those falling into the statutory category of “worker” to receive a written statement of terms, and for the reference period for calculating statutory holiday pay to move from 12 to 52 weeks.

The latest in what feels like a long line of consultations for the rules governing off-payroll workers was issued this week, this time aimed at the forthcoming changes for the private sector from April 2020.

Over the last few years there’s been a increased focus on Holiday Pay given a number of Employment Appeal Tribunal cases that have covered this area. More recently the Government has changed the reference period and has recommended changes in the rules on holiday pay compliance.

We are delighted that at the Employment Tribunal held on Monday 4th February the Judge ruled in favour of Middlesbrough Football Club's appeal against their National Minimum Wage Notice of Underpayment.

In today's economic climate, almost every organisation is under pressure to drive efficiencies and cost savings across the business. A particularly effective area of the business to do this is the contingent or external workforce. In a recent survey, our clients told us that 44% of their total workforce spend is on the contingent workforce and 62% believe that their contingent workforce enables them to improve the company's overall financial performance.

 

It’s now just over a year until the changes to IR35 in the private sector will come into effect in April 2020. We recently held a seminar on the implications for organisations and practical steps to take now to get prepared, with some key themes emerging.

From April 2019 UK employers are required to provide payslips (in either physical or electronic format) to all of their workers and also to record the hours on payslips for those workers whose pay varies according to the amount of time worked.

The Department for Business, Energy and Industrial Strategy (BEIS) issued guidance at the end of 2018 to provide employers with greater detail on the new requirements.

The risk to employers is that if a worker doesn’t receive a payslip or their payslip doesn’t include the required level of information then they may choose to bring a claim to an Employment Tribunal.

With the dynamics of the workforce changing at such a rapid pace, the measures that HR and the wider business uses to evaluate cost and effectiveness will need to evolve accordingly. To help organisations to assess the effectiveness of their flexible workforce arrangements, PwC is carrying out a Contingent Workforce Survey.

 

In recent Insights, we have discussed the stream of cases involving the gig economy where individuals have successfully challenged their status and argued they are workers with increased employment type protections. The cases have generally been motivated by the individuals’ desire to establish entitlement to basic employment rights such as the right to paid holiday and to receive National Minimum Wage (NMW) and typically have not focused on rights relating to equality and diversity.

In its long awaited response to the Taylor report, the government announced on 18 December 2018 one of the most significant, varied and numerous workplace reforms seen in the UK in over 20 years. In amongst the 51 recommendations published, the government has made explicit references to changes in National Minimum Wage, Employment Status and Holiday Pay.  This article considers a related consultation on National Minimum Wage legislation, issued by the Government on the same day.

In its long awaited response to the Taylor report, the government announced on 18 December 2018 one of the most significant, varied and numerous workplace reforms seen in the UK in over 20 years. In amongst the 51 recommendations published, the government has made explicit references to changes in National Minimum Wage, Employment Status and Holiday Pay.

In its long awaited response to the Taylor report, the government announced on 18 December 2018 one of the most significant, varied and numerous workplace reforms seen in the UK in over 20 years. In amongst the 51 recommendations published, the government has made explicit references to changes in National Minimum Wage, Employment Status and Holiday Pay.

In its long awaited response to the Taylor report, the government announced on 18 December 2018 one of the most significant, varied and numerous workplace reforms seen in the UK in over 20 years. In amongst the 51 recommendations published, the government has made explicit references to changes in National Minimum Wage, Employment Status and Holiday Pay.  This article considers a related consultation on National Minimum Wage legislation, issued by the Government on the same day.

In what must surely be the last development in a very busy week on the gig economy, the Court of Appeal yesterday delivered its judgment on the status of cab drivers.

Perhaps unsurprisingly, the Court decided by a majority that the drivers held “worker” status and were not genuinely self-employed. The reasoning closely follows that seen in the Employment Appeal Tribunal in this and a number of other cases. So far, so predictable. However, the decision does have very interesting features demonstrating that we have by no means reached a position of certainty when the question of status arises.

As an early Christmas present to us all, the Government has today issued its Good Work Plan setting out how it intends to implement the reviews undertaken earlier this year following the Taylor report. At the same time, it has published its response to a 2018 report from the Director of Labour Market Enforcement, Sir David Metcalf.

In a judgment issued yesterday, the High Court rejected an application for judicial review made on behalf of a delivery company’s riders that they were “workers” for the purposes of statutory collective bargaining. The claim was brought by a new trade union, the Independent Workers of Great Britain (IWGB). This is discussed further below, but this case is only one of many in which trade unions have recently been using the law as a tool on behalf of individuals in the gig economy.

It's been some years since law books had titles like "The Law of Master and Servant". Times change and we don't use those terms any more. But semantics are still important in the area of what in the US we'd call labor law: for example, what does it mean when someone is referred to being employed or self-employed? It's easy to think that a self-employed person pays their own tax and has no employment type rights. That is by no means the case and this confusion was apparent in some media reports of the Employment Appeal Tribunal Addison Lee decision issued last week. "Drivers held to be employees" was a typical headline. In fact, the drivers were held to be "workers" not employees. There is a significant difference in the consequences of being put into one or other of these categories. So what exactly is this difference?

The first question sounds straightforward. After all, legislation was in force well over a hundred years ago relating to people classed as "servants". The courts have been handing down decisions on the issue ever since. Nevertheless, it is fair to say that in many circumstances, it can still be very difficult to categorise someone correctly. There seem to be more tribunal and court cases on the point now than ever. The result is that after all this time, businesses and individuals are faced with uncertainty and lack of clarity on this most basic of questions which affects both their tax and employment rights and obligations.

Whilst the bulk of Government's time is understandably taken up with Brexit, recent stories in the press suggest that the Prime Minister’s aim of building a fairer society will shortly start to manifest itself in some policy announcements.

When the Government announced its response to the Off-payroll working in the private sector consultation in the recent Budget, it came as little surprise that it opted to move forward with its “lead option”, ie the extension of the current public sector rules into the private sector.  However, having announced an April 2020 implementation date, the Government seems to have listened to the flood of representations calling for a sensible lead time for the changes.

This Summer the Government consulted on the reform of rules governing off-payroll working in the private sector. While we await a formal response to the consultation (expected late Autumn), there has been much speculation about when – not whether – new legislation might take effect.

The Government’s response to the Taylor Review (The Good Work Plan) alongside Sir David Metcalf’s publication of his Labour Market Enforcement Strategy for 2018/19 and a number of recent Employment Appeal Tribunal (EAT) decisions have all brought holiday pay right to the top of the agenda for employers across the UK over the last few months.

In Royal Mencap Society v Tomlinson-Blake, the Court of Appeal considered whether workers are entitled to be paid the National Minimum Wage (NMW) for “sleep-in” shifts at work. The case also has wider implications with respect to how the judgment was arrived at, and is therefore of interest to all employers.

The latest list of National Minimum Wage (NMW) breaches was published on Friday 6th July by the Department for Business, Energy and Industrial Strategy (BEIS). It includes nearly 240 employers with total arrears of £1.44m and record fines of £1.97m. The increase in these figures reflects HMRC’s investment in its NMW enforcement activity over the past 18 months.

The whiff of change is in the air for any business that relies on the use of a flexible workforce, whether self-employed or through a personal service company (PSC). As well as HMRC’s increased focus on National Minimum Wage (NMW) compliance, Government scrutiny and recent high-profile legal cases on worker status have brought the issue to the fore and momentum will only build in the months to come. Now is the time for businesses to act to understand the potential risks they face and how they can best be managed ahead of changes taking effect.

Whilst we're awaiting the outcome of the Government's consultation on employment status, anyone with an interest in this issue has also been eagerly awaiting the Supreme Court judgment in Pimlico Plumbers vs Smith, which has now been published.

The long anticipated consultation on the reform of rules governing off-payroll working in the private sector, often referred to as IR35, has now been published. In addition, the Government has published the findings from an independent research project that looked at the immediate impacts on public sector bodies of implementing the reform of off-payroll working in the public sector.

It is clear that the following areas could potentially add significant additional administrative burdens to employers in order to ensure they comply:

• A process to accurately assess the employment status of workers.
• A requirement to provide not only the status decision to the worker but the reasons for that decision.
• An appeals process for dealing with worker disagreements.
• A process to identify each intermediary in the supply chain and specific details of the worker.

 

We are pleased to invite you to join us at our seminar focusing upon National Minimum Wage (NMW) enforcement.

The Government announced in February its response to the Taylor Review on Modern Working Practices by issuing four consultations on the concept of what "Good Work". One of these consultations focuses on employment status, which could lead to fundamental changes to the employment landscape and the engagement of contractors. To support businesses in thinking through the impact of the employment status consultation on their plans to achieve an agile and flexible workforce, and provide a forum to give their views, we are hosting a roundtable discussion session in London.

Kevin Nicholson, head of tax at PwC, comments on the Chancellor’s Spring Statement.

Following on from the Public Sector Update for Payroll Professionals which we hosted earlier this month, we are pleased to invite you to a National Minimum Wage (NMW) webinar, taking place on Thursday 15 March at 11:00am.

The tax treatment of off-payroll workers has been an area of significant focus in recent months. Julian Sansum, employment partner at PwC, shares his predictions ahead of the Spring Statement on Tuesday 13th March 2018.

In 2017 we saw unprecedented media attention around National Minimum Wage (NMW) compliance. HM Revenue & Customs (HMRC) which enforces the NMW regulations published the 13th list of NMW offenders in December, identifying 260 employers required to pay back £1.7 million to workers and £1.3 million in penalties. ‘Naming and shaming’ is automatic for any employer found to owe underpayments to workers of £100 or more in total...

In its latest update, a further 260 employers have been "named and shamed" by the Department of Business Energy and Industrial Strategy (BEIS) for failing to pay the National Minimum Wage (NMW). In addition, the level of fines issued by HMRC was the highest ever.

The Chancellor has announced that the government will publish a consultation as part of its response to Matthew Taylor’s review of modern working practices, considering options for reform to make the employment status tests for both employment rights and tax clearer.

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The long awaited Taylor Review of Modern Working Practices has now been published and is generating a lot of headlines. It's not just those businesses engaging people in the "Gig Economy" or on zero hours contracts that need to consider the changes this r...